The human resources team is necessary for every small business, even those with five or less employees. Having an HR team offers many benefits besides satisfying federal and state labor laws.
A proper HR program establishes standards for employee conduct and advancement. HR provides important services like paycheck delivery and insurance, two key items for building trust with employees. An HR team also protects small businesses from legal and tax disputes.
Setting up an HR department doesn’t have to be a headache. Understanding the basics is the best place to start before coming up with the right HR program.
The Three HR Requirements
HR basics for small business comes down to three simple functions:
- Maintaining Employee Files
- Creating a Detailed Handbook
- Posting State and Federal Notices
These three items are the primary goals of an HR program. Depending on what a business needs, they can be created in-house, purchased online or created with an HR outsourcing company for small business.
Every small business is different, so it stands that the HR program needs to be customized to your company’s industry. Each business sector has different laws and requirements, especially for posted notices. But this also applies to employee records and policies.
Business owners should consider how their business type and size will affect the three points above.
Employee Files
The employee files are a collection of records required for a proper HR program.
HR services for a small business depend on these records for a variety of functions. For example, up-to-date employee records ensures you pay the correct amount in payroll taxes. These records include tax-related documents like the W-4 or the I-9 employment eligibility form.
HR is also responsible for having employee medical and general records on file.
Medical records are necessary for health insurance applications, disability information, doctor’s notes, etc. The general records collect everything from the employee’s application and resume to contracts and performance evaluations.
You will need all this data in order to set up benefits programs, like retirement or medical care. In other words, if there’s employee information that affects their work, it should be kept on file.
Create an Exhaustive Handbook
The employee handbook is the full breadth of policies and standards of your small business. It becomes the contract of expectations between an employer and its employees.
The handbook needs to be clear about how an employee should conduct themselves. This protects your business from liability and establishes the grounds for termination.
Alcohol and drug policy, new hire policy and confidentiality are but a few of the subjects that should be in the handbook. Depending on how large your company is, you might need a handbook that covers more items in detail. This is where the customization factor comes in.
For a smaller business (5 to 15 employees), you might find that buying a premade handbook online works well. However, to have an exhaustive handbook on the front end means avoiding situations where there’s no policy in place.
Business owners should consider their company’s size and industry and decide what’s best.
Federal Notices and Postings
Notices and postings are required by law.
As part of your HR services for small business, these posters and notices need to be visible to all employees. They also need to be current. You may need to update them annually, depending on your industry and number of employees.
Most postings are affordable and available online. By far, this is the easiest HR requirement.
HR for Small Business Made Easy
That’s all you need to know for the basics of HR services for small business. The most important action item is to do your research. More preparation upfront saves time and paperwork later.
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