April 26th, 2022

3 HR Services Small Businesses Should Outsource

HR services for small businesses aren’t top of mind for business owners when it comes to outsourcing. Business owners think they can handle HR themselves—or they have one of their team members take on the responsibility on top of other job duties. But this approach only works for so long. 

Advantages of Outsourcing for Small Businesses

To get everything done and properly grow, small businesses have to outsource business functions at some point or another. The most common functions a company outsources are IT, accounting and finance, legal support, and marketing. 

Outsourcing business functions provides many advantages from controlling and reducing costs, to increasing efficiency, to reducing risk. Havard Business Review reports businesses can reduce costs by 20-30% by outsourcing non-core business functions. 

As a result, outsourcing is growing as a means of competitive advantage—PRNewswire reports that 80% of small businesses plan to outsource some form of business in 2021. Most importantly, outsourcing helps company leaders focus on growing their business and not just running it. 

So here are three HR services for small businesses that—when outsourced—provide the greatest benefit to your bottom line. 

3 HR Services for Small Businesses that Should be Outsourced

1. Payroll Services

Payroll is actually one of the first business functions a small company decides to outsource for several reasons: it’s time-consuming, it gets complicated, and you risk running into compliance issues if it’s not set up properly. Many HR compliance issues small businesses face start with payroll errors. 

The benefits of payroll services for small businesses beyond saving time and reducing risk is that they’re scalable. As your business grows, your payroll costs usually decline. So not only are payroll services the first thing you should outsource, they’re usually the last thing you should worry about running in-house.  

2. Benefits Administration

Benefits administration is another business area that takes up valuable time and resources. Further, benefits pose a challenge to businesses because of the cost to provide them. 

Not every small business will be able to provide benefits like healthcare insurance to their workers until they reach the required size of 50 employees. In fact, due to the rising cost of healthcare premiums, only 30% of organizations with fewer than 50 people offer group health insurance. 

But healthcare is by far the most desirable and expected benefit for employers to offer. When you choose to outsource HR services, access to better more affordable healthcare and benefits comes with it. An HR partner can use their buying power to provide large group plans to smaller businesses—providing you with quality benefits at a manageable cost. 

3. HR Compliance 

Business owners are all too familiar with the stress of maintaining compliance with new employment laws and regulations—especially here in Colorado. What companies may not know is that HR services from the right HR partner can come with HR compliance support

You can share legal responsibilities when you outsource HR services, which means instead of having to rely solely on your judgment or your staff’s, you can get help and guidance from your partner’s legal and compliance experts. With this strategy, outsourcing helps your business stay fully compliant with federal, state, and local labor laws and reduces your liability. 

Ready for HR Services for Your Small Businesses?

Obsidian HR can provide a variety of HR services for small businesses—including payroll, benefits administration, and HR compliance support. We also help with workplace safety and workers’ compensation and other valuable HR services. We’re here to alleviate the burden of HR so small to medium-sized businesses can focus on growing their business. 

Reach out to one of our team members to learn more or download our guide and see how we can help improve the efficiency and effectiveness of your HR. 

Download Our Guide: Improve the Efficiency and Effectiveness of Your HR

Learn how using an HR partner as an extension of your business or HR team can make your HR strategy and company more successful. 

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