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Human Resources Needs Resources: Why You Need to Fund HR From Day One
| StreetShares Blog

By StreetShares on June 29, 2018

Human Resources Needs Resources: Why You Need to Fund HR From Day OneHuman Resources doesn’t come free. And, unfortunately, small businesses commonly find managing HR issues a complicated and expensive problem. A business may not need an official Human Resources department until it reaches 150 or more employees, but HR issues start on day one. Even if your business never reaches this employee threshold, your company will have the same problems as a bigger one- just on a smaller scale.

In the beginning stages, a smart owner can handle the tasks. As you begin to grow your business, an office manager or payroll clerk can possibly take on the job. If you feel you’re hitting an administrative wall but aren’t ready for a full-time hire, you may want to onboard cloud-based Human Resources management.

You can categorize Human Resources as administrative or compassionate tasks, although they sometimes overlap. All these tasks present expenses in terms of cost or time, both of which hit small businesses hard.

See also for your veteran owned business: 7 Signs it's Time for Your Business to Hire More Staff

Administrative Tasks

There are a number of different administrative tasks that Human Resources would typically handle. These include:

  • Record Keeping: Basic business function requires HR to issue, gather, process and archive scores of forms. Job applications, performance appraisals, and more come through HR daily.
  • Compensation: It’s HR’s duty to monitor and maintain compensation that is equitable, consistent, competitive, and compliant. A small business should include a compensation plan in its formal businessplan. It can be an eye-opener because of the cost it projects for several years.
  • Payroll: HR must record, calculate, and pay for hours worked. Payroll compliance requires meticulous detail and full experience with compensation-related laws. Payroll functions also include processing payments to benefits providers, workers’ compensation providers, and tax authorities.
  • Benefits: HR should lead negotiation and purchase decisions on employee benefits because it will sell, enroll, and administer the benefits programs. The increasing expense of benefits should also be part of a small business plan because, costly as they may be, benefits are crucial to talent acquisition and retention.
  • Assessment: A small business owner must determine what performance is necessary to progress. The entrepreneur must also decide on the Key Performance Indicators (KPIs) that will measure employee performance. It’s HR’s task to initiate, monitor, and process the performance assessments.
  • Files: Even in this paperless age, Human Resources tasks are still paper-heavy. There are multiple forms related to employee personal information, recruiting, application, training, benefits, discipline, and assessments. There are also forms required by agencies, including I-9 forms that confirm the employee’s right to work in the U.S., W-4 forms to declare the employee’s tax position, and more.
  • Compliance: HR must maintain administrative and model workplace behaviors that comply with state and federal regulations, including the EEOC, OSHA, Americans with Disabilities Act, Affirmative Action, and more.

Keep your best employees around: 5 Business Practices to Keep Employees Happy

Compassionate Tasks

Aside from the administrative tasks outlined above, there are also numerous compassionate tasks including:

  • Recruiting: HR is tasked with locating the talent necessary for your business’ future. Recruiting is time-intensive if you want to find and hire the best fit for your business needs.
  • Training: Human Resources administrates the onboarding of new employees and trains the new hires in policies, procedures, and business culture.
  • Retention: Employee turnover is a burden to any business. HR must help keep the employees engaged in their work, deploy the resources they need, and assess their performance correctly and equitably.
  • Communications: Employees expect HR to show leadership in defining and delivering company culture, forming and monitoring the business vision and values, as well as in resolving workplace conflict.
  • Advocacy: Employees need to have a voice and they want to know their feedback is recognized and appreciated. They expect HR to communicate and advocate their views.
  • Counsel: It follows that HR becomes the go-to function for interpreting and implementing employee concerns and feedback. Workers seek HR’s compassionate advice and counsel on scores of issues.

Read next: 7 Free (or Almost Free) Apps to Keep Your Budget on Track

Tasks That Necessitate Funding

The time and personnel needed for these tasks will be related to the number of employees and your business plan. But no matter what, they will all need funding- regardless of your business size, each HR task requires ability and time. As a small business owner, you cannot afford to spend your own valuable time on administrative tasks and should outsource as many as possible to a payroll service or software support. With growth, the business can pay to move to an HRIS or HRM service. Compassionate tasks are essential for a healthy culture and risk management, but they can also be time-consuming affairs for an owner to undertake. The sooner you assemble an all-star HR team- even if they’re part-time or part-software- the better your business will be.

See also: Hiring for the Holidays: What You Need to Know


Now that you’ve got a few tips to get you started, download The Ultimate Guide for Veteran-owned Small Businesses for a more in-depth look at resources, growing your business and the basics of small business financing. This guide will help you through each step of your veteran entrepreneurship. And you’ll have access to valuable resources for Veteran-owned small businesses, all in one place.

Get the Ultimate Guide for Veteran-owned Small Businesses

This communication is provided for informational purposes only. It is not intended to be an advertisement, a solicitation, or constitute professional advice, including legal, financial, or tax advice, nor is StreetShares providing advice on any particular situation. This is not an offer of credit. All applications are subject to approval, no guarantee of funding.

Topics: Veteran Small Business, Funding Your Business

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