The Best HR Software for Small Businesses

As a small business owner, managing your team's HR processes can be a time-consuming task. With so many human-resource (HR) software platforms to choose from, each with its own unique features and benefits, it can be tough to determine which one is the right fit for your business. This guide outlines what features to look for when comparing HR software platforms, from employee onboarding to payroll options and everything in between. By the end of this guide, you'll feel equipped to make an informed decision and choose an HR platform that meets the unique needs of your business.

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Overview of HR Software and Why It Is Important For Small Businesses

Simply put, HR software is a tool that helps businesses manage employee data, from hiring to retirement. It allows small business owners to easily track and organize employee data, from job applications to payroll, all in one place. By consolidating this information, HR software streamlines many administrative tasks, freeing time for business owners to focus on more important things. Moreover, HR software can help small businesses ensure compliance with labor laws, reduce errors and improve employee engagement. It's no wonder many small business owners leverage HR software to help grow their businesses.

What to Look for When Choosing HR Software

Managing employees and their administrative tasks can be a time-consuming task for a small business owner. However, with the help of the right HR software platform, you can streamline this process and spend more time on growing your business.

With the vast array of HR software platforms available, it can be difficult to choose the best option for your company. When evaluating HR software options for your small business, there are several things to consider. One of the first things to look at is the features available. You'll want to ensure the software you choose provides all the features you need to manage HR efficiently. Furthermore, it's important to note the ease of use of the software system. You and your employees will be using this software on a daily basis, so you want to make sure it's user-friendly and easy to navigate. Hopefully, the information below will help narrow down the best option for you!

Exploring Top HR Software Options for Small Businesses

Now that you know what to look for, let's explore some of the top HR software options for small businesses.

  • Gusto: No matter the size or stage of your business, Gusto's all-in-one HR solution includes payroll management, benefits administration, and compliance management. Their streamlined approach, including unlimited payroll runs at no extra charge, identifying tax credits that will save you money, and automatically filing your taxes, simplifies your HR process and gives you back your valuable time. Lastly, Gusto will help you create a healthcare package that checks all the boxes and attracts the best talent for your business.
  • Zenefits: This cloud-based HR software is the complete solution for managing all your HR needs on the go. Zenefits features HR management and compliance, time and attendance tracking, and benefits administration. They also built an intuitive mobile app so you can manage your HR needs at any time from anywhere. Zenefits offers a free demo, with no credit card needed and no setup!

  • BambooHR: This software offers a full suite of HR management tools, including an applicant tracking system, employee onboarding, and performance management. BambooHR was built for SMBs and believes that everything is easier when you can build a strong culture and create a great place to work. It's no surprise that they offer a user-friendly interface and exceptional customer service. Your employees can onboard through their mobile hiring app and track their time and PTO all in one place! The other bonus? BambooHR integrates with other key business software programs such as payroll and benefits. Start your free trial to see how BambooHR will save you time and money. 

Related Reading: What is a Paid Time Off Policy, and Does Your Business Need One? 

What Features Are Most Important To You? 

With the vast array of modern HR software platforms available, it can be difficult choosing something that has such a big impact on your day-to-day operations. However, it ultimately boils down to reflecting on your current needs and which platform can meet those. For example, your business may need extra support in payroll but have no use for a compliance and applicant tracking system (ATS). Now, this doesn't mean that if a platform offers compliance and an ATS, you shouldn't use it, but it does grant you more wiggle room in which pricing plan you move forward with. Hopefully, the information below will help narrow down the best option for you!

Employee Onboarding

Employee onboarding is an essential part of the employee lifecycle process. Good onboarding creates a positive impression and makes new hires feel welcomed, leading to higher levels of retention. When evaluating HR software platforms, look out for software that provides tools to automate onboarding processes, such as sending welcome messages, FAQ sheets, and similar materials. The platform should also remain accessible to employees after onboarding, allowing them to access their profile, salary, and work history, as well as any employee benefits, if applicable.

At the same time, it should provide you with notification alerts to ensure you complete your onboarding processes on time. Platforms like Gusto allow you to create a templated checklist for each onboarding experience helps ensure things don't fall through the cracks. Lastly, applicant tracking systems within your HR platform can be incredibly beneficial to keep your hiring process efficient and organized.

Related Reading: 5 Types of Employee Benefits: Small Business Edition 

Payroll Options

Payroll is a significant aspect of the HR process and can often be the most time-consuming. It involves managing employee salaries, bonuses, taxes, and other statutory deductions. When evaluating HR software platforms for payroll options, look for a solution that automatically calculates and generates employee paychecks. The software should also allow you to process payroll for employees and contractors within a few clicks. Additionally, the software should ensure data security and confidentiality, especially when managing sensitive employee data such as salaries.

Performance Management

Performance management is a continuous process that involves setting goals, performance reviews, and feedback. In comparing HR software platforms with performance management capabilities, look for platforms that measure individual employee performance and offer objective evaluations. The platform should provide forms for manager-employee reviews, track feedback, and have goal-setting capabilities and skills assessments. Some even allow the feedback to be hidden until the meeting, so each individual can add in their thoughts without being influenced by the other. In addition, the platform should provide interactive dashboards that offer real-time feedback, allowing staff members to make actionable decisions based on the data.

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Business Compliance

Ideally, your new HR platform will play a crucial role in ensuring your business remains compliant with regulations. This can include any mandatory training that varies from state to state, providing paystubs that are compliant with state laws, providing support for FLSA overtime pay regulations, and more!  To choose the best HR software platforms for your company, look for software that offers customized training programs that cater to your company's compliance framework. There are currently 7 states that require Harassment in the Workplace Training, so this may be a good place to start when reviewing any necessary training your business/employees may need.

Tax Filing

Filing taxes can be time-consuming and stressful, especially for small business owners. The platform should be able to generate reports and send tax forms, 1099s, and W2s for tax purposes, so you don't have to spend all of tax season nose deep in accounting. When comparing HR software platforms, look for options that offer automatic tax filing services. Some platforms will automatically file payroll taxes on your behalf and should generate year-end tax forms for you and your employees.


Last but not least, it's important that you feel confident when using the platform. Sometimes software can become so robust and intricate it adds more problems than it solves. Find a platform that you feel streamlines your approach, allows you to automate repeatable processes, and contributes to the culture and work environment you are looking to create in your business.

While we hope this list is helpful, remember these are only suggestions and the most important thing is that you find a solution that meets your unique needs as a business owner. With the right HR software platform in place, you can focus on growing your business instead of managing time-consuming HR processes.

Find the Tools You Need to Grow Your Business Successfully

Now that you've determined the right HR platform, it's important you have the other tools necessary to grow and scale your business! Set yourself up for success by implementing customer relationship management (CRM) software and marketing tools to design and scale your social presence. Explore Fundid's Growth Partners to find the right solution for you! 

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