HR and Payroll Services

Whether you’re hiring or maintaining two, 10, or 50 employees, there’s a lot of work to be done and considerations to keep in mind. You need the profit to cover salaries, to adhere to labor laws and best practices including retirement packages, to make sure you have proper benefits to attract talent, and to ensure payroll is accurate including taxes and deadlines. The good news is that, by hiring an HR service, you can have someone or a full team that knows proper employment law, can create employee policies, and run payroll with your accountant to ensure everything is fair and above board. 

While HR normally reports to legal counsel for small and mid-size companies, they can stand alone and report to you until you’ve grown into a larger size. They can handle employee issues, compensation packages, and work with finance and the executive team to make sure your business is protected. In many ways, HR is the lifeblood of the company, but this kind of support comes at a cost.  

Below, you’ll learn more about finding the right person or group that can handle HR work and either run payroll or manage the firm or software that does it for you.  

And if you need to finance HR services for a few months while you get up and running, as the systems and additional staff will come at a cost, we’ll match you with a trusted partner that offers working capital loans or short-term business loans to strengthen your cash flow.

HR services are the tasks involved in managing a company’s workforce throughout the entire employee lifecycle. They can be done by an internal or external party, and they help to ensure the company stays healthy by maintaining the work environment. Example tasks include: 

• Resolving disputes and handling personnel issues.
• Adding benefits and perks to make the company more appealing to attract new talent and retain existing staff.
• Creating retirement plans, benefit packages, and exit strategies when employees are ready to move on.
• Hiring, firing, and ensuring teams are staffed to the best of the company’s abilities.
• Negotiating starting salaries and sometimes what caps and minimums can be.
• Creating career paths with leadership and management.
• Processing payroll when there is no accounting team.
• Being support for the general counsel. 

HR protects your company by helping to maintain employee satisfaction, reduce or remove problems, retain and attract talent, and settle disputes. 

Payroll services can also be done by an internal or external party. These services are designed to manage employee compensation, tax withholdings, and reporting for compliance purposes. Here is a quick list of the typical functions of payroll services:  

• To ensure taxes are withheld properly
• To ensure payment is disbursed on time to both employees and the IRS
• To ensure the requested money employees put toward retirement is withheld and distributed correctly
• To ensure benefit deductions are done accurately, along with wage garnishments
• To generate year-end, quarterly, and sometimes monthly reports for leadership
• To ensure legal compliance and labor laws are being followed (similar to HR services)
• Anything else related to paying your team including not mixing up contractors, part-time staff, hourly staff, and salaried full-time employees.  

Payroll services can be self serve where you use a software system or app that is set up in your computer or phone. Or, this service can be provided in a more hands-on way by an individual consultant or company. In this case, they would be the ones to handle these services, allowing you to focus on your day to day.  

New businesses will normally be ok with self-service offerings. Meanwhile, companies that are starting to spend “more time than it’s worth” on managing this part of business may want to hire a part- or full-time service provider.   

And when you pass 100 team members, it may be time to look for a medium-size consultancy if you don’t want full-time employees. Nevertheless, an HR manager with payroll service experience could be a perfect solution for small to mid-size businesses. 

HR and payroll services share a few common functionalities within your company, which is normally why payroll can be a part of HR’s responsibility until you have a finance team. 

HR is responsible for employee compensation and benefits packages including salary, retirement, and insurance benefits. They’re generally familiar with and have records of what is owed and the amounts that go into payroll. HR keeps track of hiring and termination documentation, part of which are W4, W9, and W-2 documents that determine how payroll gets paid and what is withheld. They’ll also have knowledge of terminations, when those are set to occur, and who will need final paychecks. Further, when an employee retires or moves on, HR makes sure their paychecks stop, and that means updating payroll records.  

Both need to adhere to strict laws and ensure data and paperwork are kept secure. Finally, accuracy is vital to both functions. When payroll is inaccurate, it causes employee morale and legal issues, both of which are the responsibility of HR. Too much pay means HR may need to ask for money back, and too little pay decreases trust. This is why these two branches often work closely together.

If you’re wondering when is the right time to hire an HR professional or a payroll specialist, there are signs you should look for. Check out the sections below to learn more.

Hiring an HR professional is usually recommended when you and your team are spending more time than you should dealing with HR-related tasks.   

When these tasks begin eating up a significant portion of your time, this is the first sign that you could benefit from having HR on staff. Next, you want to make sure you can afford the service/new hire. If you’re not able to afford a salary for someone that does not bring in revenue, you probably cannot hire. However, a contractor or part-time person may be within your budget. 

Also, make sure the person will keep the spirit of your operations alive, or be able to enhance and improve it if the goal is to keep and maintain the morale of your current team. It’s worth noting that sometimes a company needs to grow up in order to grow, and HR can help with this transition as well by formalizing processes and policies.  

The right time to upgrade your payroll services is usually when performing this task manually takes up too much time and you’re ignoring or missing deadlines. Go to a software company or app and begin automating the process. If the cost of the software is less than the cost of your salary while working on these functions, it’s a win for your business. 

When you’ve hired more people and the software is no longer efficient because of data entry, or they keep increasing the costs as you grow, hiring a consultant is the next step. Their experience can help you beyond data entry. For example, they may be able to share ways to save money by optimizing operations, ensure payroll and taxes are done by deadlines, and verify the accuracy of all information.  

At a certain point, you may grow too large for a small consultancy. They either won’t be able to handle the workload or they’ll need to charge more because they’re working overtime hours due to the smaller size of their team. This is where you may need to hire full-time employees or a larger firm. Determine what you can afford and if the benefits outweigh the costs. Both can be expensive, but both can also save you money in other ways by helping to optimize processes and reduce unnecessary spending.