Our final component of our National Small Business month series is dedicated to Human Resources (HR) – something vital to the culture of any company. While having an in-house team may mean meeting face-to-face to deal with issues in a timely manner, it may be beneficial to outsource your HR services. The following are ten possible benefits we have identified for outsourcing.

  1. Cost Savings – The overhead costs of an in-house HR team are typically quite high. Outsourcing reduces these costs and can help avoid having to financially maintain non-revenue-generating expenses. Outsourcing also allows you to activate your HR services only when necessary.
  2. Payroll and Accounting – Simply put, time spent calculating compensation could be spent elsewhere. Incorrect payroll can result in inaccurate, or costly tax filing. Outsourced HR companies streamline employee communication and tracking that could otherwise be difficult.
  3. Global Talent – Using Professional Employer Organization (PEO) companies inevitably expands company perspectives and connects you to an otherwise unreachable talent pool
  4. Risk Management – Changes to employment and labor laws are frequent creating inherent risk in remaining up to date with regulations specific to your business. HR professionals are responsible for staying current with federal and state laws allowing them to manage risk and comply with laws.
  5. Efficiency – Outsourced providers have access to advanced technology. Managers can instead dedicate their time to improving company efficiency and effectiveness, both of which can improve profitability.
  6. Employee Development – HR providers can monitor performance, report findings, and implement performance plans. Employers can consequently have confidence in their employees’ ability to comply with policies and meet defined goals.
  7. Compliance Aid – The complex nature of laws pertaining to hiring, insurance claims, benefits and regulations makes it easy to overlook certain features. Failure to comply with regulations can be extremely costly making compliance management of the utmost importance.
  8. Reduction in Employee-Related Expenses – Labor costs such as health insurance premiums, workers’ compensation insurance, recruiting fees and legal costs are amongst the largest business operating expenses. Outsourcing HR essentially turns fixed costs into variable costs freeing up capital for other business ventures.
  9. Health Insurance Benefits – Offering competitive benefits that attract, incentivize, and retain talent can be tough for small businesses. PEO companies can provide small employers the ability to offer robust benefits.
  10. Employee Leasing – A great way to expand your company without added administrative stress is via employee leasing wherein a PEO is the official employer. While you remain in control over the employees’ responsibilities, the PEO company manages things such as wage reporting and employment taxes.
  • For more small business strategies check out our e-Book. We are here to help you make financially sound decisions for your individual small businesses. If you would like to discuss any of our small business tips in greater detail, contact Trost Financial at any time.