Get expert advice on every topic you need as a small business owner, from the ideation stage to your eventual exit. Our articles, quick tips, infographics and how-to guides can offer entrepreneurs the most up-to-date information they need to flourish.

Subscribe to our blog


When should your startup outsource HR?

Posted by Shivali Anand

August 26, 2021    |     3-minute read (569 words)

Tasks that don’t generate revenue take up a large portion of small-business owners’ time. Initially, a do-it-yourself approach to HR may seem like a brilliant idea since it allows you to rein in expenses and maintain control. But what happens when your firm starts to expand and you need to focus on core activities?

A professional employer organization could be a convenient and cost-effective solution. For a reasonable price, a PEO can handle payroll, benefits, regulatory compliance and other HR functions so you don’t have to.

While PEOs aren't suitable for every business, those that select them as their outsourcing provider are generally able to offer more advantageous benefits packages and as a result, recruit better personnel. If your HR department has become a burden on your company's time and resources and you can't afford to hire an in-house HR expert, outsourcing to a PEO is a good option. 

As per the National Association of Professional Employer Organizations, small firms that use PEOs expand 7% to 9% more quickly, have 10% to 14% less employee turnover and are 50% less prone to go out of business.

Here are six signs that it might be time to outsource your company's human resources.

  1. Your company is thriving, but your bottom line is suffering.

You should be concerned if your firm is growing, but you're not generating enough money. As a firm grows, administrative duties such as answering benefits questions, conducting background checks and resolving employee issues increase. With the aid of an expert PEO, you can focus on revenue-generating tasks that will help keep your company growing.

  1. You are not able to keep up with employment laws.

Because employment rules change often and compliance breaches can be expensive, businesses of every size have to stay on top of it all. You must ensure that your infrastructure enables data collection and reporting in accordance with the law, in addition to comprehending current local, state, and federal rules that affect your organization. PEOs are well-versed in these rules and can shield you from costly fines and penalties.

  1. The business struggles to keep costs in check.

Extra administrative duties to attend to HR necessitate more resources. When you outsource your company's HR, on the other hand, you have access to someone who has the experience and expertise you need and won't have to train.
Additional cost savings may be obtained by utilizing a complete human resources information system, or HRIS, which can help you and your workers streamline business procedures.

  1. You're having a hard time attracting talent.

Finding and keeping good employees is costly, time-consuming and challenging. Offering appealing and comprehensive employee benefits is one method to remain competitive when hiring and retaining top personnel. You can do so by partnering with a PEO.

  1. Employee engagement needs a boost.

Small businesses may find it challenging to invest in areas where they do not see a rapid return. A PEO can help in this area by implementing cutting-edge HR technologies, providing training and connecting employees with seasoned HR experts. As a consequence, a positive work environment is established, and turnover is decreased.

  1. You need an employee handbook.

If you think you don't need an employee handbook or well-written processes, you're probably wrong. Your employees will better grasp your company's goals and expectations when you provide them with a handbook, and creating one is a task that can also be handled by your PEO.

Learn how we can put more time back in your day.