Most businesses handle their HR functions in-house, at least at first. Some of this is a matter of practicality.
If the founder is the only employee, many compliance issues don't apply. Adding a part-time employee here or there makes it a bit more complicated, but still manageable.
Once a company hires full-time employees and offers benefits, HR gets very complicated. Businesses can unintentionally violate a state or federal employment or tax regulation with ease. This can put the whole business at risk.
Keeping HR in-house isn't your only option. Instead of trying to build an HR department, many businesses turn to HR outsourcing services.
Not sure HR outsourcing services are for your business? Keep reading for some key reasons why HR outsourcing beats in-house HR.
Better Compliance
One of the big HR functions is compliance with state and federal employment laws. That is a huge task that covers a lot of ground, including:
- Payroll
- Taxes
- HIPAA regulations
- ADA regulations
- Anti-discrimination regulations
Outsourcing HR puts compliance into the hands of a business that must stay abreast of these changes or go under.
Cost Control
Running an internal HR department gets pricey in a hurry.
An HR manager earns a median salary of about $117,000 a year. Say that you give that manager a staff of two at $50,000 a year each. You're on the hook for a $217,000 HR budget before you even consider benefits, hardware, software, or printing costs.
An outsourced HR solution typically lets you put a hard cap on your HR budget. Many HR solution providers offer flat rate services that come in well under the cost of an in-house department.
Access to Experts
Small businesses in particular often suffer from an expertise gap. The most talented people in any given field typically get snapped up by bigger companies with deeper pockets. Small businesses often limp along doing what they can in-house and hiring whoever they can afford.
By outsourcing HR functions to another company, a business gets access to the experts on staff. This ensures that business owners needn't rely on their own understanding of new laws or question whether their policies are in compliance.
HR Outsourcing Services Benefit Your Business
HR outsourcing services provide crucial benefits to smaller and growing businesses.
They free businesses from ongoing concerns about compliance. They often prove cheaper than building an in-house HR department. They let businesses access experts that might otherwise remain out of reach.
All of these benefits serve the more important end of letting you focus on core business functions. Instead of spending your time reading up on HIPAA, you spend your time building new products. Instead of trying to hire an HR manager, you focus on customers and their needs.
Looking for more tips on running a better startup or navigating entrepreneurship? Take a look at some of our business-focused posts in the Human Resources and Careers sections of the Bootstrap Business Blog to learn more about HR outsourcing services on a budget.
