Set Up HR Functions and Get Back to Business

HR functions
Avatar photo

Liz Strikwerda

Content strategist and corporate blogger (2000+ posts). Her work has been featured on G2's Learning Hub, Human Resources Today, Better Buys and over 500 business websites. She plays bluegrass mandolin and enjoys sailing her catamaran and hiking in the red rock wilderness of southern Utah. Connect with me on LinkedIn

An inexpensive time and labor solution is essential for keeping HR tasks organized. Good software helps everyone–the Human Resources manager, frontline managers and employees.

Paper timesheets have gone the way of the rotary phone. A time and labor system automates timecards and approvals. Integrated timekeeping mobile apps allow remote workers to track hours from any connected device.

An applicant tracking system (ATS) simplifies everything necessary for recruiting. This includes job posting, emails, resume importing, candidate screening, and interviewing. With an ATS, a small business can process hundreds of applicants quickly and efficiently.

When it comes to payroll and employee time tracking, employers cannot afford to be casual. Most employment law assumes employer guilt first if their is a DOL audit or employee dispute.

HR functions are integral to business operations. But many small business owners can’t dedicate a lot of time and energy to Human Resources. Understandably, they’re focusing on their core business. Sound familiar?

This approach may work when you have three employees. But as you grow, ignoring HR will hold you back. For example, you may unintentionally commit a compliance violation. In addition, when HR is always on the back burner, it can create a negative work atmosphere for everyone.

HR Functions are Critical to Success

If you are growing quickly, it’s especially important to get your people systems in place. Manual paperwork will become overwhelming. You will also need to ramp up hiring. However, the hiring climate is so competitive, small businesses without a formal process and good tech will struggle. Payroll also becomes more complicated as your workforce grows. And it’s a compliance minefield.

Plus, you’ve got to create the policies and procedures on which to run your organization. Human Resources is the foundation for a healthy business. The goal is to create processes that will accommodate your growth indefinitely

Carefully designed processes and systems help businesses flourish. Standardized workflows are key:

  • What do we need to do?
  • Who will do it?
  • How will they do it?

First, let’s look at core HR functions

  1. Recruiting, Hiring, Onboarding
  2. Time, Labor, Payroll
  3. Compliance
  4. Training, Development, Performance Management
  5. Benefits Management
  6. Labor Relations
  7. HR Analytics and Reporting
  8. Employee Relations

Keep in mind that this list is not exhaustive, don’t let it overwhelm you. While you need payroll as soon as you hire your first employee, you won’t need many of the other functions at first. You can build your Human Resource department gradually.

Technology is Indispensable for HR Functions

Automation is no longer a nice-to-have. Small businesses can’t grow if they have manual processes. An inexpensive time and labor solution is essential for keeping HR tasks organized. Good software helps everyone–the Human Resources manager, frontline managers and employees.

You don’t need to wait until you have 50 employees. SaaS (Software as a Service) HR systems are affordable for the smallest businesses. The savings in admin labor alone justifies their price many times over. In fact, some cost less than $10 per employee per month and don’t require an upfront cost like legacy software back in the day.

Unified HR platforms go by various names. HRIS (Human Resource Information System), and HRMS (Human Resources Management System) are two of the most common. Each is an integrated suite of tools that handle various Human Resources functions. You can learn more about them here: HRMS Success.

HR functions

Employees in Portland, Oregon. Photo by Allgo on Unsplash

Choose a Good Small Business HR System

Priority one for setting up HR functions in your small business is to choose your platform. A system tailored for small business:

  • Is affordable
  • Sets up quickly and has a rapid time-to-value
  • Is easy-to-use
  • Grows with your business

For professional guidance on choosing a system, get our free Small Business HR System Buyer’s Guide. Learn about tools and features and use evaluation templates to structure your research process.

Small Business Compliance

As you set up HR, build compliance into your workflows. For example, in your time and attendance policy, address overtime. Who is eligible to work overtime? How will managers approve it? What is the process for ensuring proper overtime pay? Also, when writing interview questions for job applicants, check that each is EEOC (Equal Employment Opportunity Commission) compliant.

Furthermore, train managers on wage and hour practices and understand HR recordkeeping laws.

Whether you are just getting your business going, or want to perform a thorough HR audit, our Small Business Compliance Checklist can help you stay on the right side of the law.


It’s helpful to break down payroll processing into seven parts:

  1. Employee Information Gathering
  2. Time and Attendance
  3. Payroll Approvals
  4. Taxes and Withholding
  5. Employee Payments and Stubs
  6. Payroll Recording and Reporting
  7. Compliance

How Often am I Supposed to Pay My Employees in a Small Business?

Most small business owners pay employees weekly, twice a month, or monthly. Pick a payroll schedule and stick to it. You probably know that you are subject to the Fair Labor Standards Act (FLSA). Learn details on the U.S. Department of Labor website.

small business

Small business in Falcon Heights, Minnesota. Photo by Ioana Cristiana on Unsplash

10 Things You’ll Need From Each Employee for Payroll

  1. Complete job application
  2. W-4
  3. Application for state withholding certificate (many states require an additional form to the W-4)
  4. I-9
  5. Bank information (if enrolling in direct deposit)
  6. Medical insurance forms
  7. Retirement plan documents
  8. Union contracts and other documentation (if applicable)
  9. Contracts, non-competes, intellectual property, etc. (if applicable)
  10. Signatures for employee handbook and policies

You can download forms on the IRS website.

Create a Time and Attendance Policy and Process

This is where you decide how employees will punch in for shifts and track their hours. Paper timesheets have gone the way of the rotary phone. A time and labor system automates timecards and approvals. Integrated timekeeping mobile apps allow remote workers to track hours from any connected device.

You also need an absence management strategy. What should employees do if they are going to miss their shift? How will you handle Family and Medical Leave?

Moreover, set rules around meals and breaks, clocking in early and trading shifts.

For a sample Time and Attendance policy, get our free Employee Handbook Template.

Payroll Approvals

Next, at the end of the pay period, send hours data to the payroll manager or service. This includes hours worked by the employee and supplement income which includes overtime hours, bonuses, and commissions.

Be aware that overtime is not a simple calculation of time-and-a-half of the employee’s hourly wage when the employee has earned bonus (also called supplemental) income. The bonus income must be calculated as an hourly wage over the period they earned it. Then you can calculate time-and-a-half.

Taxes and Withholding

After payroll is approved, calculate the employee’s net pay. First, you have to withhold federal, state, and local taxes. For federal, use the Employer’s Supplemental Tax Guide for the correct year. Secondly, your state collects taxes also. Contact your state department of labor for information. Thirdly, you might have local taxes so contact your local taxing authority for details.

Next, subtract deductions and withholdings from gross earnings. This includes state, federal and local taxes. If you have a retirement benefit and insurance, deduct this contributions. Also, you may have to garnish child support from some employees’ earnings.

Of course, if you hire a payroll provider, they will handle all of this.

Earnings Statements

The next step is to distribute paychecks and earnings statements. Some states require the earnings statement (also called a pay stub) to show sick leave or family leave accruals. Additionally, in some industries and jurisdictions, you may have to show overtime.

How Do I Pay Payroll Taxes?

You can submit payroll taxes online with the Electronic Federal Tax Payment System (EFTPS).

Payroll Recording and Reporting

The IRS requires you to send payroll reports at least quarterly. State reports are typically due quarterly as well, but check with your state to make sure.

Indeed, when it comes to payroll and employee time tracking, employers cannot afford to be casual. Most employment law assumes employer guilt first. You can be fined for filing a late payroll report. (Also, if you set your business up as an S-Corp, and you are the only employee, you still have to submit payroll reports.)

Payroll Compliance

Now that we’ve discussed the nuts and bolts, let’s turn our attention to compliance. When you step into payroll and employee time tracking, it is vital that you are aware of employment laws.
Employers have many compliance hats to wear. Some laws require you to provide employee schedules in advance. And state laws require certain procedures for overtime pay or shift scheduling.

In addition, other laws require that employers provide employees with sick leave and track data for a minimum number of years.

Critical Laws that Affect HR Functions

  1. FLSA Wage and Hour laws
  2. State or local predictive scheduling laws
  3. City or state industry overtime laws (such as restrictions for nurse employers)
  4. State or local minimum wage laws
  5. Federal, state, or local FMLA and other leave laws

Talent Management

In our Swipeclock Small Business survey, respondents cited hiring quality talent as a top concern.

How will your organization make hiring decisions? It’s helpful to create a yearly hiring plan. To do this:

  • Assess current workforce
  • Outline business goals
  • Perform a skills assessment
  • Identify talent needs
  • Create a timeline for

We go into detail here: How to Create a Yearly Hiring Plan.

An applicant tracking system (ATS) simplifies everything necessary for recruiting. This includes job posting, emails, resume importing, candidate screening, and interviewing. With an ATS, a small business can process hundreds of applicants quickly and efficiently.

Post Jobs With a Couple Clicks

For example, an ATS automates the processing of online job posting to job boards and your social media pages. Eventually, you will have a careers page on your company website and you can post there at the same time. With an ATS, you manage all the places you post jobs from within the system. When a candidate applies from a job board, they enter your ATS, though the transition is seamless from the applicant’s perspective.

Standardize Resumes

When your job is posted, you will start to receive applications and resumes. Applicants will submit their resumes in a variety of electronic formats. Your ATS will standardize the electronic documents and create a database. You can scan any paper documents into the software as well.

Resume screening (or parsing) starts narrowing down your pool of applicants before you even read one resume. The software identifies keywords and phrases that match the job description. Algorithms eliminate candidates without the necessary qualifications or experience. It categorizes the potential hires depending on how well their experience and qualifications match up with the requirements of the position.

Track all Applicants in Your Dashboard

Now that you have a pool of candidates, the software tracks applicants through the process. On your ATS dashboard, you can see where all applicants are in the workflow. This includes interviewing, reference checking, job offers, and acceptance. When the position is filled, the software maintains an applicant database. It is organized by position and department. When a similar position comes open, you already have a pool of candidates who have passed the resume screening.

small business

Salon employee in Logan, Utah. Photo by Adam Winger on Unsplash

Employee Onboarding

Employee engagement can start on day one. Great onboarding helps create a company culture that new hires want to be a part of. Onboarding software makes it easy to handle the paperwork so the manager can focus on welcoming the new hire and helping them assimilate as quickly as possible. Efficient, digital onboarding helps the new employee get up to speed and start contributing sooner. Self-service portals simplify document completion, management and compliance.

Benefits Management

Employee benefits enrollment is a key component of onboarding. HR portals make it easy for the new hire to choose benefits and enroll. Once they’ve enrolled, they can access documents online at their convenience when they have changes or need information. Administrators appreciate sophisticated records management tools and integration with third-party software.

Performance Management

Lack of advancement opportunities is one of the leading reasons employees quit a job.

Performance review software linked to productivity measurement tools have transformed the process. Performance appraisal can now be an ongoing process instead of a once-a-year assessment. The software allows all stakeholders to collaborate. Managers, team leads, and HR can create development plans and track progress.

A performance review process boost employee engagement, satisfaction, and overall productivity.

HR functions

Photo by Redd on Unsplash

Shift Scheduling

Though frontline managers are in charge of employee scheduling, it is, nevertheless, an HR function. Companies that approach scheduling strategically reap multiple benefits.

Start by finding the best fit between availability, skills, business need, and compliance rules. Give teams enough notice to avoid last minute changes and absenteeism. Then handle any unplanned absences as exceptions through a shift trade board. Simple, fast, easy.

Advanced scheduling systems improve efficiency and workforce morale. Work schedule apps allow managers to tackle the most complicated scheduling logistics. In addition, data-driven scheduling can give you a competitive advantage.

Should You Outsource HR Functions?

Small business payroll and benefits management are probably not your forte. Allowing professionals to handle them frees up your time to run your core business. You can outsource one or two functions, or let a PEO handle everything.

Professional Employer Organization

As mentioned, at the extreme end of outsourcing is a professional employer organization (PEO). A PEO enters into a joint-employment relationship with you. This means they are the actual employer. In a sense, they lease your employees back to you. The PEO handles payroll, employee benefits, workers’ compensation, and employment taxes.

In conclusion…

Whether you are a business owner or HR manager, this is your chance to set up Human Resources functions that will serve your needs. Careful planning will pay off in spades for years to come.

Simplify HR management today.

Simplify HR management today.

Mental Health Awareness Month: A Round-Up of Resources

May 22, 2024
Posted in

Mental health is a critical aspect of overall well-being. When people feel supported in their emotional and mental needs, they tend to thrive in their personal and professional lives. Providing the necessary support to members of your organization is no longer just nice to have; it’s an essential aspect of caring for employees and their…

Read More
manager in food factory solve late timecards

6 Tips to Say Goodbye to Constant Timesheet Reminders

May 14, 2024
Posted in , ,

Managers hate to nag about an employee’s timecard with ongoing timesheet reminders. It can feel like a power struggle with a bunch of five-year-olds. You hire competent professionals. You don’t want to think of them as kids who refuse to pick up their toys. Getting employees to turn in timecards is a problem that has…

Read More

WorkforceHub takes care of business.

We’ll show you how.

Request a Demo - Footer Form

Looking for help? Please click here.

brand - dots