The top 4 small business HR needs to be aware of

As a small business owner, life revolves around building and growing your business. To do that you probably have to take on multiple roles to make sure everything gets done. Oftentimes, small business owners overlook the key role human resources play in the success of their business. Many might ask, “Do I even need HR?” The answer is yes.

All small businesses have human resources needs, but meeting them can be difficult without access to HR expertise. The best place to start is with the basics. Here are the top four small business HR needs so you can keep your business on track.
small business hr needs

1. Maintaining employee files

No one likes paperwork, but creating organized and up-to-date employee records is essential to protecting your employees’ information and your business. Whether in paper or electronic form, employers should maintain three distinct employee files:

  • A personnel file with resumes, evaluations, performance reviews, disciplinary action documentation, W-4, etc.
  • A medical file with medical exams, disability information, and insurance information. The medical file must remain separate and confidential (as governed by HIPPA) and should only be accessible by those who need to know.
  • Employee I-9 forms (work eligibility and employee identity forms) should be separate from personnel and medical files. However, all employee I-9 forms can be kept in one joint file, instead of being separated by individual employees. Maintaining separate I-9 forms is required by the U.S. Citizenship and Immigration Services (USCIS).

2. Providing an employee handbook

Small business owners need written rules and regulations so their employees know what rights they have as well as what is expected of them while at work.

What needs to be in an employee handbook?

Providing an Employee Handbook

Your employee handbook should be well-written and comprehensive. Poorly worded or inadequate policies leave room for confusion, assumption, and therefore, liability. Information in handbooks should reflect actual company policies, as well as current state and federal laws. This way, your employees know how they are expected to comply with these rules, as well as understand the legal obligation your business is under to do so. An employee handbook should include the following topics:

  • Company overview
  • Employee conduct policies
  • Benefits programs
  • FMLA (required by law) and paid time off policies
  • Pay and promotions procedures
  • Workplace safety guidelines
  • Worker’s compensation policies (required by law)
  • Equal employment policies (required by law)

Make certain all of your employees receive the handbook and acknowledge they have read, accept and understand the policies soon after they are hired. Keep the acknowledgement page in the employee’s personnel file. It’s also important for employees to know that a handbook is not a contract, and therefore subject to change. Update your handbook regularly and notify your employees of those changes in writing. It would be best to have legal counsel review your handbook before disseminating to employees.

3. Hiring and terminating employees

Hiring and terminating Employees

Of all small business hr needs, hiring and firing employees holds the potential for the most risk for employers. Making a mistake could lead to an unwanted and costly discrimination lawsuit down the road. That’s why it needs to be done right every time.

Without someone fluent in small business hr, creating accurate job descriptions, screening candidates, conducting interviews, and selecting, onboarding and training new hires is a daunting task. Many times this leads to hasty hiring which makes employers vulnerable to error. It’s understandable. Hiring (and firing) takes a tremendous amount of time and effort.

Hiring a new employee without a critical look into how and why you hire could create more stress down the road if you hire wrong. Take time to audit your hiring methods, and look for and eliminate any discriminatory practices. Ensure open job positions are easily accessible to all potential candidates. Clearly and firmly explain employee expectations in the hiring process so there is no confusion in the future.

It’s best to keep detailed and accurate documentation of employee performance reviews (negative or positive) and any disciplinary actions or employee violations. Those documents could be used as evidence to support your decision to terminate an employee. When in doubt, document everything! It would be best to have legal counsel review your handbook before disseminating to employees.
Dealing with employee conflicts


Managing employee disputes is arguably the most complicated problem employers face because every situation is unique, which makes preparation and prevention difficult. It’s true that the best defense is a good offense. The most effective way to prevent serious employee issues from arising is to have clear and precise policies and plans already in place, with documentation to back up your actions. It’s inevitable that you will have a disgruntled employee at some point. When you do, address the issue as quickly as possible. If necessary, seek guidance from an employment lawyer or small business hr consulting service.