What Does HR Mean to Small Businesses? Part 1

Human Resources (HR) is the department that helps businesses operate and run. HR is responsible for recruiting new employees, training new hires, running payroll, administering benefits, improving workplace culture, retaining employees, and communicating amongst the company. For small businesses, this department is generally made up of only a few people. Depending on the size, all these responsibilities may fall on only one person designated as the Human Resource Manager. Whether HR means a group of several people, one person, or an off-site HR firm (such as Principle Strategies) to your small business, the goal is the same- to help a business perform at its highest level and grow in an organized way while remaining compliant with all rules and regulations.    

Responsibilities of HR in small businesses

Some large businesses are able to dedicate an entire department and floor to employees or even teams that regulate each of the specific tasks below. However, small businesses do not have the means for that expansive of an HR department. Following are the various facets that make up HR and are all done by one person or very few people. 

Employee Files:

In many cases, the HR manager takes on large clerical and filing responsibilities. One of those task being maintaining employee files. In compliance with federal regulations, HR must have each employee’s I-9 form, a medical file, and an employee file for each person that are kept separate. According to VA Code 8.01-413(B) that went into effect July 1, 2019, “Every employer shall, upon receipt of a written request from a current or former employee or employee’s attorney, furnish a copy of all records or papers retained by the employer in any format.” Employers have 30 days to provide records including the employee’s dates of employment, salary and wages, job title and description, and any injuries that may have occurred during the time employed. It’s imperative these files are maintained and stored in a safe place. 

Policies and Procedures:

HR is also responsible for implementing an employee handbook that details expectations and protocols, as well as keeping up with organizational changes and business laws. Having your company’s policies and procedures outlined in a handbook, updated regularly and legally reviewed, will notably help a small business run smoothly when it comes to managing vacation requests, attendance, discipline, and much more. Having these written rules and guidelines can lower a small business’ risk of liability and protect against expensive lawsuits. 


Documentation goes hand in hand with compliance. There are federal rules all businesses must follow in order to keep the business compliant and legitimate. Many rules and regulations are based on the number of employees in a given business. For example, there are different anti-anti-harassment and discrimination laws for businesses with less than 15 employees as well as more than. There are also separate policies regarding disabilities and accommodations based on employee numbers less than and greater than 15. Employment classifications are based on company sizes of less than 50 employees or more than 50 employees. Then there are still some laws that apply to all sizes of businesses. These laws relate to the following: wages, leave, immigration, benefits, safety, and union. Additionally, there are also certain posters required in the workplace based on company size in the same way as the federal rules and regulations.


Recruitment for small businesses is generally less in-depth taking up less time and monetary resources. In fact, according to CareerBuilder, a bad hire costs a company $17,000 annually, which is a hard hit for a small business whose revenue is predominantly comprised of recruitment success. Recruiting good new hires is essential to the prosperity of the business. The best recruitment strategy for small businesses to use is social media like Indeed and LinkedIn to find new hires in an effective and cost-efficient way. It is also imperative to have well written and specific job descriptions and vet resumes in the most effective way possible so as to not be too overwhelmed in trying to find your next new hire.

Payroll and Benefits:

Payroll is one of the most important responsibilities since the deductions and withholdings must be accurate in order for the employee to receive their paycheck. This can be a reason small businesses may choose to outsource so that a professional well-versed in the regulations can do payroll instead of the HR manager who has other tasks to do besides just payroll. Benefits are another important aspect since there are certain benefits employers must offer according to business laws. Your small business must offer social security tax, workers compensation, unemployment, COBRA, and FMLA. Benefits that aren’t required include health, dental, PTO, holidays, and more but vary based on your state and size.  


HR is responsible for the day-to-day operations in the workplace and ensuring everything and everyone is operating smoothly. The HR manager generally becomes the communication point between employees or departments when issues arise. Keeping issues at bay starts with a smooth and successful onboarding. Onboarding includes getting all required new hire documentation filled out and filed as well as training the employee for the job. Keeping the workplace running smoothly leads to a huge increase in the retention of valuable employees for the company. 

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