There are 32.2 million small businesses in the U.S., which accounts for 99.9% of all companies. When a new one comes along, the competition is intense, so it must go at it hammer and tongs to find ways to adapt, evolve, and stand out.
HR software for small businesses can be just what this kind of company needs. Essential HR tasks may be repetitive and time-consuming, so small businesses often overlook them due to budget constraints and limited staff.
However, small business HR software has the power to streamline and automate, freeing up the team for more important responsibilities. Still, signing up for a service without doing research can be dangerous, so it’s worth ensuring you’ve found the most appropriate HR software for small businesses.
Best HR Software for Small Businesses in 2023
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| Employee Management | 
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Best Overall: Bamboo HR
Bamboo HR has been empowering small to medium-sized businesses for over ten years as one of the best HR management software for small businesses. A small company has to juggle numerous operations, but it may fail due to budget constraints, understaffing, and inadequate organization and planning.
With Bamboo HR, hiring, payroll, benefits, onboarding, and offboarding can be automated or simplified. Moreover, the company offers excellent support with extensive resources like podcasts, blogs, webinars, and more. Despite not offering a free-forever version, it provides a 7-day free trial, letting a small business get a look under the hood before committing.
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Best for Payroll Processing: Gusto
Payroll is one of the most critical HR tasks, but this isn’t just because it involves sensitive information but also because any mistakes can affect employee satisfaction and, in turn, productivity. HR management software for small businesses like Gusto is a godsend for any small business looking to simplify payroll operations and reduce the risk of errors.
Gusto has a full-fledged payroll system that allows businesses to settle payroll with just a few clicks. It integrates with a time tracking and attendance tool to help reduce the stress about employee benefits for anyone in HR. On top of this, Gusto offers a free trial, an instant demo, and even a $100 referral scheme.
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Best for Small Remote Teams: Deel
Since the pandemic, more companies are attempting to implement remote or hybrid working models. However, this will likely fail without the right tools as these setups require a different approach to on-premises work environments. Fortunately, Deel is the perfect HR management software to help small businesses make this change.
With Deel, you can avoid the nightmare of endless manual tasks with features like global hiring, and it even sponsors working visas for more than 30 countries. Plus, the company offers country-specific compliance, the shipment and management of work equipment (like laptops), global payroll access, and more. It’s vital to your company’s success that a proper infrastructure that can support a remote work model is put in place.
In addition, Deel is free for up to 200 workers, giving small to medium-sized companies working on a tight budget the opportunity to enhance their operations.
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Best for Core HR Automation: Rippling
While a small business doesn’t share the same responsibilities as a giant enterprise, it still has to oversee and manage HR, IT, finances, and more. Dealing with all this with limited time and people is exhausting, so, at some point, someone will cut corners to get the work done. This can have dire consequences.
Rippling lets you avoid this possibility as it’s a core HR software that automates numerous operations, such as recruiting, onboarding and offboarding, and payroll. Furthermore, you can manage benefits, compliance, performance, and time and attendance tracking without struggling. To top it off, Rippling is thoroughly customizable and integrates with over 500 apps.
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Best for Employee Management: Homebase
Managing employees can be overwhelming, and small companies can struggle due to poor organization and insufficient people to help fix this. However, Homebase and its many features can make all the chaos disappear or at least fade considerably.
Homebase provides time tracking, scheduling, messaging, and team communication to refine anything about or for employees. Furthermore, the Homebase app lets team members check their own schedules, hours worked, time off, and wages and even send messages to their coworkers. Incredibly, Homebase is free for any business employing up to 20 people and with a single location.
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Best for Shift Scheduling: Paycor
While Paycor is another HR solution with plenty of appealing features, shift scheduling is where it shines. Understaffing and overstaffing is a real problem within small businesses, and this is most often caused by poor management. With Paycor, everyone can breathe a sigh of relief since scheduling can be handled easily.
One minor and easily preventable error in scheduling can end up costing a small business money and resources it can’t spare. Paycor’s features allow managers to organize shift scheduling based on employee feedback, set scheduling rules, notify the team via the mobile app, access insights, post shifts in advance, and much more. The company provides a 14-day free trial and various discounts.
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Best for Benefits Administration: Zenefits
One of the most widely available features of HR software is benefits administration, and for small businesses, this is crucial for not just retaining but also attracting employees. Moreover, a strong benefits policy shows your team that you care about their goals and well-being and motivates them to be loyal and perform well.
Zenefits provides a robust solution for managing benefits while providing a marketplace to shop for plans and even customize them. This helps companies easily evaluate and compare various providers offering retirement benefits, health insurance plans, and more.
Zenefits also includes a benefits portal where employees can update coverage and personal information and check their insurance cards. The company provides a 14-day free trial and various discounts.
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Best for HR Compliance: Namely
All businesses are subject to local, state, and federal regulations, and not complying with these can result in paying back taxes or suffering financial penalties like fines and interest. With Namely, all this can be avoided with its robust compliance resources that prevents any damage to a business’s reputation or finances.
Namely offers an extensive compliance resource library with local policies and current and pending regulations and notifies managers if the company is not following the law to the T. Moreover, there’s unlimited access to certified HR advisors who can provide clarifications and help.
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Understanding the HR Needs of a Small Business
Unfortunately, 50% of small businesses fail within the first five years, and human resources software for small businesses can be invaluable in preventing this. It can help a company avoid collapse and even increase the chances of success considerably.
The main reasons a business may go belly-up are connected, and often, tackling one can solve others. The most common challenges faced by small companies are:
- Finding and accessing top talent.
- Employee retention.
- Regulatory changes.
- Endless administrative paperwork.
- Over-reliance on employee multitasking.
- Failure to handle rapid growth.
- Limited resources.
HR software gives you the power to handle all these challenges, starting with something as simple and time-saving as automation to complex regulatory compliance in different countries. It can do most of the time-consuming tasks of an HR department, freeing the team to focus on what it’s important.
Key Features To Look for in HR Software for a Small Business
When looking for small business HR software, it’s common to be tempted by expensive solutions with countless features. However, most small businesses don’t require a broad range of tools and may be working on a tight budget, so choosing a service that accurately reflects the company’s needs is imperative.
Small businesses should look for the following key features to ensure a smooth road to success:
- Workflow automation: This simplifies repetitive and laborious tasks by automating them, which decreases the number of employees needed.
- Scalability: A decent HR software can adjust to a company of any size.
- Centralized data: This reduces the risk of errors and provides robust data security.
- Recruitment and ATS: This helps to source, recruit, and onboard new employees.
- Benefits administration: A strong benefits policy ensures a satisfied workforce.
- Payroll processing: This makes sure that payroll includes accurate calculations and tax deductions.
- Compliance tools: HR software ensures global regulatory compliance with country and industry-specific laws and regulations.
- Extras: Attendance and time tracking, employee database management, mobile app, and customer support.
Benefits of Implementing HR Software in Your Small Business
Purchasing or subscribing to HR software will make everyone’s job easier, building a happier workplace environment. The benefits are numerous:
- Easy access to a talented workforce.
- Simplified staffing and onboarding.
- Precise payroll management.
- Effortless compliance adherence.
- High-level data security.
- Informed decision-making.
- Enhanced employee satisfaction.
- Efficient document management.
- Versatile scalability.
- Trouble-free remote workforce management.
- Efficient and effective operations.
When chosen correctly, HR software can catapult a business to unprecedented heights. There are plenty of affordable solutions out there, and some can even be had for free forever or trialed for a limited time.
However, while there are plenty of top-notch HR solutions for small businesses to choose from, it’s never a one-size-fits-all situation. Each business has different needs, so it’s worth making that extra effort to find the perfect match.