Why your small business needs HR software (+ our top x picks!)

  • While large organizations can absorb the cost of an HR manager’s salary, small business owners must handle tasks like hiring, onboarding, and training themselves.
  • All-in-one software solutions like Homebase can automate and streamline these HR processes to save you time, money, and effort.
  • Homebase is specially designed for small businesses so we can address logistical and compliance issues specific to you.

At a glance: Our top pick for small business HR software

If you’re a technophile, and have a very specific idea of how you want to run your small business, consider using Connecteam. This flexible software lets you build an HR system that adapts to your business operations.

But our frontrunner is Homebase’s all-in-one HR software solution. Designed with small businesses in mind, Homebase has a team of experts who can assist you with all compliance and policy matters. It’s the perfect choice for shops, cafes, and restaurants which don’t have the budget for an HR department but still need to protect themselves against catastrophes like hefty fines and lawsuits. 

What to look for in HR services for small businesses

When you’re new to HR software, you probably don’t know all the features you need. So we’ve created this checklist of all the essentials for small businesses. 

Document storage and tracking

Paperwork is a necessary evil of doing business. It protects management and employees but requires lots of your time and energy. If you get something wrong, the stakes are high with penalties reaching into the tens of thousands. Plus, paperwork is just plain boring.

A great HR platform shoulders most of the burden by:

  • Providing a safe and secure storage digital storage system
  • Letting all relevant staff members access the documents to view and edit them
  • Using granular permissions to prevent the wrong people from seeing sensitive files
  • Storing documents for as long as mandated by state and federal law
  • Keeping all documents in one central location to make your file management easier
  • Tracking documents so you can tell whether they’ve been uploaded, completed, and verified
  • Sending you notifications when documents are reaching their expiry date

Access to HR Professionals

Navigating the complex US labor laws can overwhelm even the most experienced managers. The rules vary according to state and frequently change and it’s your responsibility to keep up with them. You can miss one small detail and end up facing a large fine or an employee lawsuit.

Be mindful that HR platforms which rely on international helplines and chatbots won’t be able to get into the finer points of your business situation. You need access to certified professionals with experience dealing with small business HR that can confidently point you in the right direction. So look for an HR platform that includes this service.

Affordable pricing

The aim of small business HR software is to avoid the costs of outsourcing these tasks or hiring an HR manager. So whatever software you choose should also be cost-effective or it removes the point.

As small businesses can have anywhere between five and 100 employees, sometimes getting the right price can be tricky. Some HR platforms target businesses at the higher end of this scale. They might start their payment plans at prohibitive costs for small teams or offer better deals for using their services at greater volumes.

If you’re a small business but plan to grow, you’re better off finding software with flexible yet affordable plans. That way you can upgrade your software instead of overhauling it when you hire more employees or open a new location and your HR needs change.

Extensive hiring and onboarding tools

Hiring and onboarding often come with a high price tag. Recruitment agencies can charge as much as 25% of a candidate’s salary for the first year. Then training usually costs an average of US$1270 per employee too. Even if you handle the hiring process yourself, it’s a full-time job which means you’ll inevitably lose money in labor costs.

HR solutions can reduce hiring and onboarding costs by managing much of the process. Effective software should include features like:

  • Customizable job description templates
  • Automations that load your job posting to all the most popular sites
  • Background checks
  • Applicant trackers
  • Screener questions to filter applicants
  • Onboarding welcome packages

Automations, notifications, and reminders

With HR software, you want the program to handle as many of your administrative tasks as possible through automations. We’ve already mentioned job listings but you can also automate tasks like scheduling, time tracking, and payroll with the right software. This helps you to reduce errors and avoid problems like accidentally underpaying your staff.

Sometimes you’ll need to take over for tasks like verifying a document or confirming a new hire. A great HR software should notify you when it’s your turn. Then it should keep reminding you until you’ve completed the task.

The same applies to your employees. For example, if they haven’t clocked in or taken a break — which can cause compliance issues for your business — some HR software can notify and remind them.

An all-in-one solution

The best HR solutions give you access to all the tools you need either on the platform or via integrations. That way you can manage all your HR tasks in the same place and don’t have to keep switching between different programs.

Look for HR software that offers all of the above and:

  • Payroll
  • Scheduling
  • Time tracking (including a time clock)
  • Team communication

Top 5 small business HR software comparison chart

Before we look at the best small business HR in more detail, here’s an overview of what each product offers.


Cost per month

User rating*

Tools and popular integrations

Stand-out features

Free plan
Upgrades start from $20 per location 


– Hiring and onboarding
– Time tracking with time clock
– Scheduling
– Payroll
– Team chat app
– Access to HR professionals
Custom made employee handbook service

14 day free trial

Free plan for up to 10 users

Upgrades start from $29 plus $0.5 per employee (after the first 30 users)


– Hiring and onboarding
-Timetracking with time clock
– Scheduling
– Team chat app
– Employee timeline

Free for the first three months

Prices otherwise not readily available


– Onboarding
– Scheduling
– Time tracking
– Payroll
– ZipRecruiter and Quickbooks integrations
– Access to HR professionals
– Employee handbook builder

Free 30 day trial

Prices start from $5.50 per employee

Recruitment is $200


– Hiring and onboarding
– Scheduling
– Time tracking
– Sage Payroll integration
– Workflow builder
– Recruitment pipeline

Plans start at $40 plus $6 per employee


– Hiring and onboarding
– Scheduling
– Time tracking and time clock
– Payroll 
– Slack and MS chat integrations
– Access to HR professionals
– Email provisioning

*Average rating across G2, Capterra, and GetApp

5 top-notch HR systems for small businesses

To understand what each software can offer you, it’s best to check how it distinguishes itself from the competition, its pros and cons, and what price plans are available. That’s why we’ve broken down our top five picks into these categories.

1. Homebase

Homebase is an all-in-one HR solution for small businesses. The Homebase team prides themselves on boosting small, local businesses like cafes, restaurants, and independent shops. To date, the software has a user base of 100,000 small businesses and that number is still growing.

Homebase pinpoints what small businesses need to offer them features like slick search and filter settings on the hiring dashboard
Source: https://joinhomebase.com/

Stand-out features

Homebase’s biggest stand-out feature is its HR assistance. This feature gives you access to a team of experienced HR professionals that help you stay compliant with employment laws like FMLA, workplace safety, and wage and hour laws. They can help you get proactive about potential issues and help your business survive tough situations like lawsuits and high penalties.

But Homebase’s custom handbook builder is a close second. You can contact Homebase, answer some questions, and they will create an employee handbook tailored to your business. And if you already have a handbook in place at your business, our experts will take a look at it for you and make sure you are providing the best company policies to your employees.

There are also email alerts on labor law changes for your state. That means you can make sure your business stays compliant and won’t risk accidentally violating a rule and incurring a fine. That’s crucial when one-time FLSA violations can cost you up to US$10,000.

Homebase ensures you stay compliant with nifty features like document tracking and custom welcome packets for new hires

Pros and cons

Homebase’s greatest advantage is that it’s a holistic solution for small businesses. It combines HR with other essential features that businesses need. So you can go through the whole process of hiring a new candidate, onboarding them, adding them to your schedule, and paying them in one place — with Homebase’s expert HR available to you at every stage.

As Homebase specializes in businesses with less than 100 employees, their HR pros are experts in small business matters. They have specific knowledge about local and state laws and experience in handling challenging situations like terminations and changing labor laws that adversely affect your business.

With paid plans starting at just $20 a month, Homebase is also one of the most affordable options. The cost is based on location only so you won’t have to pay extra for each new employee either.

One potential con is that some businesses may not need the whole HR suite. If that’s you, check for simpler options on the market.


Homebase offers four simple plans. 

  • The Basic free plan for one location which includes hiring and timesheets
  • Essentials for US$20 per month per location that has clock-in tracking, payroll integrations, and basic HR chat support
  • Plus at $48 per month per location which adds on time-off and overtime tracking
  • All-in-One which gives you full document management, onboarding management, and access to Homebase’s team of HR professionals

Even Homebase’s highest cost plan is more cost-effective than some competing software’s medium price plans.

2. Connecteam

Connecteam is an employee management system that designs its features around mobile app users. It’s a popular choice for small to medium businesses in the wellness and telecommunications industries.

Connecteam’s pipeline helps you to keep track of each employee’s documents, milestones, and progress so you can ensure their well-being
Source: https://help.connecteam.com/en/articles/5956786-starting-guide-to-the-timeline-feature

Stand-out features

If you have a large team or multiple locations, you’ll probably appreciate Connecteam’s timeline feature. The timeline helps you stay up to date with your team’s progress by displaying each employee’s previous and upcoming milestones. Having an overview of your team’s achievements can also help you make decisions like who to promote and who to offer professional development.

Pros and cons

Connecteam offers a high level of customization which means that you can adapt the software to suit your business’s needs. 

The tradeoff is that Connecteam has a steeper learning curve and requires more support from the help team. So this platform is a better option for business owners who are already tech-savvy. Connecteam also doesn’t provide a 24-hour live rep like many other platforms.


Connecteam has a free plan for up to ten users. This includes limited access to the HR & Skills document features and operations tools like the time clock and scheduling.

You can upgrade to the Basic plan for $29 per month which is fixed for the first 30 users. After that, you have to pay 50 cents per user. This plan gives you access to visibility settings on documents and lets your employees make edits.

3. RUN (powered by ADP)

RUN is an offshoot of the popular data processing company ADP. Its main focus is payroll and tax for small businesses but it includes HR and marketing platforms.

RUN’s main area of expertise is payroll and the associated hour and wage laws
Source: https://www.g2.com/products/run-powered-by-adp/reviews

Stand-out features

The employee handbook wizard is an interesting feature. RUN’s tool lets you answer questions about your business to create a draft handbook. You can then review the handbook and easily update it over time. 

RUN also has an HR helpdesk which you can contact anytime to ask one-off questions or schedule appointments for more in-depth guidance. 

Pros and cons

Users praise RUN for its simple design and ease of use. This makes it a good fit for busy managers who don’t already have a lot of tech knowledge.

One disadvantage of RUN is that you can’t access the HR helpdesk unless you’re signed up to the more expensive price plans. If you’ve got a small team, you have to choose between paying for more features than you need or forgoing the extra assistance.


RUN currently offers three months free for US businesses with less than 100 employees. After that period, there’s a choice of four plans but prices aren’t readily available.

4. Sage HR

Founded in the UK, Sage HR aims to make HR processes easy for small to medium businesses. It has one mandatory module called ‘HR Core’ and then users can choose whether to add other modules like ‘Recruitment’ and ‘Timesheets’.

Sage HR can give you an overview of the hiring process to help you compare candidates more easily
Source: https://www.g2.com/products/sage-hr/reviews

Stand-out features

Sage HR boasts a unique “recipes” feature. You can create custom workflows by inputting what the system should do when specific actions happen. For example, you can automatically send employees well wishes when they reach an anniversary milestone. This may be useful for managers with multiple locations who don’t get to know their staff as intimately.

The recruitment pipeline is also a great way for Sage HR users to track and get an overview of candidates. 

Pros and cons

Sage HR’s modular approach lets you pick and choose exactly what you need down to the number of employees. As you only pay for active employees, you won’t lose money on processing HR for staff on leave.

The downside is that the fee for specific modules can be more costly than other HR software. Although $5.50 per employee for the ‘Core HR’ should suit most budgets, the ‘Recruitment’ module is at a fixed $200 rate. This is a large expense for very small businesses that still have a high turnover rate because they hire students or seasonal employees.


Sage’s HR modules are split across four modules. They’re priced accordingly:

  • ‘Core HR’ and ‘Leave Management’ combination: $5.50 per employee per month
  • ‘Recruitment’: $200 per month fixed rate
  • ‘Timesheets’: $3.50 per employee per month

5. Gusto

Formerly known as ZenPayroll, Gusto is a payroll, employee benefits, and HR management system. They primarily serve small businesses with 10-50 employees.

Gusto’s HR experts can help you understand which local and state laws apply to your business
Source: https://www.g2.com/products/gusto/reviews

Stand-out features

Gusto’s most noteworthy feature is its HR support. You can contact certified HR experts from its Plus and Premium plans to get expert advice on policies, hiring, and terminations. These experts can also help you craft an employee handbook for your business.

Another interesting feature is Gusto’s email provisioning. You can create and manage staff emails for all your staff on your business account. This may be helpful for businesses like salons and wedding boutiques which may solicit customers via email.

Pros and cons

One advantage of Gusto is its contractor-only plans. This plan lets businesses that rely on freelancers — like salons and spas — only pay per nonemployee. Contractor-only plans also include 1099 NEC form management to help report on all nonemployee staff.

One drawback is that Gusto prices start at a higher point than most other HR software. But they do include more features from the offset. 


Gusto’s price plans start at $40 per month plus $6 per employee. You can upgrade to the Plus plan at $60 per month and $9 per employee to access features like the applicant tracking system and e-signatures.

FAQs about HR services for small businesses

homebase customer photo homebase customer photo

How do I set up an HR for a small company?

You can set up an HR for a small company with the following steps:

  1. Build HR processes like hiring, onboarding, training, and more
  2. Assign HR roles whether it’s just you or other managers too
  3. Organize any necessary HR training for yourself and others
  4. Choose like HR solution like Homebase to automate your processes

How many HR people do you need per 100 employees?

The rule of thumb is that you need 1.4 HR people for every 100 employees. That means small business owners and managers need to start delegating some of their responsibilities if they grow. You may face difficulties if you continue to manage a business of over 70 employees with just one person responsible for HR.

How much does it cost to outsource HR?

The cost of outsourcing HR varies depending on your number of employees and industry. Most businesses can expect to pay between US$45 and $1500 a month based on what processes they choose to handle externally.

For example, recruiters usually charge 15-25% of a new hire’s salary for the first year which comes to around US$6000 for small businesses. But some HRIS solutions like Homebase start from as little as US$20 a month.

How can Homebase help with my small business's HR?

Homebase can help with your small business’s HR by automating and streamlining essential processes like hiring, onboarding, and document management. It can also put you in touch with HR professionals to help you set up policies and guide you through challenging situations. Best of all, Homebase notifies you about document expiration dates, changing labor laws, and compliance issues to prevent you from getting penalties.

What is the best HR software for a small business?

The best HR software for a small business is Homebase. Our all-in-one solution offers all the essential features that you could need like:

  • Hiring and onboarding
  • HR and compliance
  • Access to HR professionals
  • Payroll
  • Scheduling
  • Time tracking (including a time clock)
  • Team communication

Plus we offer flexible and affordable pricing. There are free plans for businesses with one location. If you need to upgrade, the paid plans start from $20 per location so you don’t have to pay extra for each employee but the cost stays low.