Many small businesses underestimate the importance of an effective HR department. From handling training to payroll and compliance and everything else that has to do with employees and wages, the HR department is integral to business success.

Payroll helps keep employees happy and your business in compliance with the law, and things like benefits and good training can make all the difference in attracting and keeping the right candidates. Here’s why your HR department is essential to your business’s success.


Many small business owners lack the time and resources to properly manage payroll. Whether you’re using a payroll service or attempting to handle it yourself, this is something that no business owner should take lightly. Employees aren’t likely to stick around if payroll isn’t accurate and punctual, and you’re sure to land yourself in hot water with the IRS should you fail to file payroll tax.

Let’s be honest; not every small business owner is good with finances, and that’s ok. You can’t be expected to have all of the necessary skills to run every part of your business. Don’t put your employees’ loyalty or your business at risk by trying to handle payroll yourself (unless you’re an accountant). There are many payroll and PEO services available that can assist you and keep your business in compliance with local, state, and federal law.


Your company’s training program is actually more important than you may think. Not only does proper training help minimize risk in the workplace, improve the overall quality of your company’s work culture and products, and improve productivity, but it also improves the loyalty and happiness of your employees.

An employee who’s been well-trained will better understand his or her place within the organization, and, therefore, will perform better.

Not to mention, when you properly train your workers, they know exactly what to do in order to minimize risk and increase the efficiency of their work processes. This can be a great benefit to any business, and improved productivity often means higher sales and lower costs.


Offering benefits is the best way to attract qualified candidates to your business and keep your current employees within your organization. Now more than ever, employees look for businesses that offer greats benefits packages as deciding factor in whether or not to apply with that company.

Your HR department will handle any benefits packages or questions, but if you can’t afford to staff an HR office, you may opt to outsource these services with a PEO company.

A PEO company can offer better benefits than your company would otherwise have access to as a standalone business. PEOs work with hundreds if not thousands of small businesses all over the country, which allows them to have access to the same benefits as some of the largest companies in the country. If you’re looking for a PEO service, you can find the best companies on


Besides payroll compliance, businesses are responsible for remaining in compliance with a myriad of local, state, and federal regulations; depending on the industry, location, and regulations that apply. This can all be quite exhausting to track on your own and is the territory of the human resources department. When you can’t afford to staff one, outsourcing may save you many penalties for falling out of compliance.

You might find that your specific industry has very strict federal regulations when it comes to things like pollution, and you’ll need to be aware of and in compliance with these regulations to avoid fees, legal penalties, and government interference.

Risk Management

Risk is something every business must manage effectively in order to avoid accidents, financial blunders, and poor decisions. If you’re operating in a particularly dangerous industry, risk is something you’re familiar with. Even the most secure businesses carry some form of risk, and without proper risk management, one mistake could cost everything.

Analyzing risk is a tedious and time-consuming process, but one that must be done. Once you’ve analyzed the risks your business faces, as well as potential risks, you can formulate contingency plans to meet and manage those risks before they become problems. Good training falls under the category of risk management as well!

The Take-Away

While many small businesses simply can’t afford to staff an entire HR department, outsourcing is the best way to ensure you’re getting the same level of service and remaining in compliance with things like payroll and other governmental and safety regulations.

If you’re running a small business, it’s important to remember that you can’t possibly do everything and certain things like payroll require special care and attention. By outsourcing your HR department, you’re putting these tasks in the hands of professionals so nothing is left to chance.