When you’re a small business owner, it’s easy to think that the people management software you need is simple. You can just hire an HR person or two, and they’ll handle everything for you. But if you don’t have the capital or bandwidth to do that, then you’ll be forced to manage your company’s human resources manually.
There are plenty of hidden costs and risks to doing HR manually. Managing HR manually erodes productivity, because it takes up time and effort that could be used for other things. It also erodes accuracy, since manual processes are more error-prone. And it erodes employee satisfaction, since poor HR practices lead to bad experiences for employees.
The cost of doing HR manually adds up over time, and eventually becomes greater than the cost of using HR software. The lack of capital or bandwidth forces many small business owners to handle their own HR. But even if you don’t have to, there are advantages to using HR software:
HR software provides visibility into how well your HR functions are working. It allows you to track employee engagement, feedback, performance trends, etc. This means problems are easier to identify before they escalate.
Compliance with federal, state, and local regulations grows more complex as your team grows. With HR software, you can monitor compliance automatically, reducing risk.
The reality of HR inside a small business is very different from what you’d find in enterprise companies. In most cases, HR is a one-person job — and that one person is often the business owner herself. Unlike mid-sized or larger companies, which tend to employ specialist HR teams, small businesses generally lack the staff to handle HR on a dedicated basis. This means that ease of use and broad automation will be far more important than specialist-grade depth.
What to look for in small business HR software
So when evaluating HR software for a small business, you should focus first on whether the software covers the baseline HR functions you need once full-time hiring begins. These include:
Payroll
Benefits administration
Onboarding
Scheduling
Time-off management
Automate talent acquisition
Monitor PTO, overtime, employee leave
Optimize recruiting and onboarding
Streamline open enrollment
Support compliance with federal and state regulations
Once you’ve identified a list of platforms that cover these basic functions, you should evaluate them based on a number of criteria. First, look at G2 ratings and user feedback from other small business users. Second, consider usability: Does the software take weeks to learn? Is it easy to set up? Third, look at affordability: Can it do a lot cheaply? Fourth, check integrations: Does it integrate with accounting software, CRMs, project management tools, Microsoft 365, Google Workspace, Zapier no-code integrations? Fifth, scalability: Will it grow from core people ops into performance management, advanced analytics, expanded integrations? If so, it reduces the need to re-evaluate every few years.
Recommended platforms
Based on these criteria, here are the platforms I would recommend for small businesses. Each one has its own distinct use-case:
BambooHR is all-around HR software. BambooHR does everything you need in HR, and does it really well. Employee records, onboarding, reporting are all solid. BambooHR is also the tool that most HR professionals already know, making it a category default.
Gusto is the go-to choice when payroll is your primary concern. Gusto appears consistently across sources as the top recommendation for payroll. Gusto handles payroll, benefits, and compliance, and integrates easily with accounting systems.
Zoho People serves small businesses that want affordability. Zoho People is affordable and offers a range of HR features. Its main advantage is that it makes HR processes effortless, allowing business owners to focus on managing their people.
GoCo serves small businesses that want ease of use. GoCo is intuitive and easy to navigate. Its main advantage is that it’s easy to use.
Homebase serves hourly teams. Homebase is great for hourly teams who need scheduling, timesheets, and payroll support.
Rippling serves small companies that want to automate administrative work. Rippling automates the time-consuming admin work involved in running a company, including payroll, benefits, onboarding, compliance, and more.
Deel serves startups. Deel is a great option for startups looking to manage their HR needs.
Ultimately, the best HR software for your small business depends on your specific needs. Consider the factors outlined above when choosing the right platform for your business.