HR software is essential for small businesses as it streamlines and automates critical human resource functions, saving time and reducing errors. It helps manage employee data, payroll, compliance, and recruitment efficiently without needing a large HR team.
Common Challenges Faced by Small Companies
Small businesses often struggle with hiring qualified employees while balancing limited time and resources. The recruitment process can be lengthy and costly, with bad hires leading to high turnover costs. Compliance with ever-changing labor laws poses risks of fines and lawsuits due to limited legal expertise. Managing payroll, benefits, and employee records manually increases errors and administrative burdens. Additionally, maintaining employee engagement and tracking performance are challenging without dedicated HR staff or tools. These hurdles slow growth and affect employee satisfaction, making streamlined HR solutions vital.
Tasks Small Businesses need HR software to handle
Managing limited HR staff or no HR department
Small companies often lack a full HR department, requiring software to automate tasks like employee onboarding, record keeping, and benefits administration to reduce manual workload and human errors.
Ensuring legal compliance and accuracy
HR software helps track and implement labor law changes, automate record keeping, and generate compliance reports, minimizing the risk of penalties and legal complications.
Scalability as the business grows
As small businesses expand, HR solutions must scale seamlessly to handle increased hiring, payroll complexity, and workforce management without disrupting operations.
How to Choose the Right HR Software for a Small Business
Ease of use
Choose software with intuitive interfaces and simple workflows that require minimal training, enabling quick adoption by small teams.
Pricing and scalability
Look for transparent, affordable pricing plans that fit your budget and allow you to add features or users as the business grows.
Payroll integration
Ensure smooth integration with payroll systems to automate salary calculations, tax withholdings, and compliance reporting, reducing errors and manual efforts.
Cloud accessibility
Opt for cloud-based solutions that provide remote access, automatic updates, and data security, supporting flexible work environments.
Customer support
Reliable customer support is crucial for promptly resolving issues and maximizing software benefits, especially with limited in-house HR expertise.
Best HR Software for Small Businesses
BambooHR
BambooHR excels in providing an all-in-one HR platform focused on employee data management, applicant tracking, and performance management tailored to small businesses.
Key Features
- Employee database
- Applicant tracking system (ATS)
- Time-off tracking
- Performance management
- Reporting & analytics
Pros & Cons
Pros: User-friendly interface, strong onboarding and reporting tools, good customer support.
Cons: Payroll integration requires third-party tools; Pricing is higher compared to some competitors.
Pricing
Starts at around $6 per employee per month, custom quotes available.
Rippling
Rippling unifies HR, IT, and payroll management, making it ideal for small businesses wanting integrated workforce and device management.
Key Features
- HRIS and payroll
- Benefits administration
- Device management
- Automated onboarding
- Time and attendance
Pros & Cons
Pros: Single platform for HR and IT, easy onboard/offboard automation.
Cons: Pricing can be complex; some features require add-ons.
Pricing
Base pricing starts around $8 per employee per month.
Gusto
Gusto is best known for its payroll services combined with HR management, perfect for small businesses prioritizing payroll accuracy and compliance.
Key Features
- Payroll processing
- Employee self-service
- Benefits administration
- Compliance assistance
- Hiring and onboarding tools
Pros & Cons
Pros: Excellent payroll features, easy user experience, strong compliance support.
Cons: Limited customization; some features only in higher tiers.
Pricing
Starts at $40 per month plus $6 per employee.
Deel
Deel specializes in global payroll and compliance, ideal for small businesses hiring remote or international employees.
Key Features
- Global payroll and contractor payments
- Contract management
- Compliance automation
- Tax support
- Onboarding
Pros & Cons
Pros: Simplifies international hiring, strong compliance tools.
Cons: More focused on global contractors; less comprehensive HR features.
Pricing
Custom pricing based on business needs.
Paycor
Paycor offers scalable HR and payroll solutions with strong reporting and onboarding features suited for growing small businesses.
Key Features
- Payroll and tax filing
- Recruiting and onboarding
- Time and attendance
- Performance management
- HR analytics
Pros & Cons
Pros: Robust reporting, user-friendly payroll, scalable solutions.
Cons: Customer service can be inconsistent; steeper learning curve.
Pricing
Starts at approximately $99 per month plus per employee fees.
Trinet
Trinet provides comprehensive HR outsourcing with payroll, benefits, and risk management, supporting small businesses seeking PEO services.
Key Features
- Payroll and tax compliance
- Benefits administration
- Risk and compliance management
- Talent management
- Employee self-service
Pros & Cons
Pros: Extensive PEO services, good benefits options.
Cons: Pricing may be prohibitive for very small firms.
Pricing
Custom pricing based on services selected.
Paychex
Paychex delivers flexible payroll and HR services with strong compliance and benefits administration for small businesses.
Key Features
- Payroll processing
- HR management
- Employee benefits
- Time and attendance
- Risk management
Pros & Cons
Pros: Scalable and customizable, strong compliance support.
Cons: Pricing transparency can be limited.
Pricing
Customized quotes available.
ZohoPeople
ZohoPeople is a cost-effective HR platform focused on leave management, attendance, and employee self-service.
Key Features
- Attendance and leave tracking
- Timesheets
- Employee database
- Performance appraisals
- Document management
Pros & Cons
Pros: Affordable, integrates well with Zoho suite.
Cons: Lacks robust payroll and recruiting features.
Pricing
Starts at $1 per employee per month.
ADP
ADP offers comprehensive, scalable HR and payroll solutions suitable for all business sizes, including small businesses seeking enterprise-grade features.
Key Features
- Payroll and tax filing
- Recruiting and onboarding
- Benefits administration
- Workforce management
- Compliance support
Pros & Cons
Pros: Industry leader, extensive features, good support.
Cons: Can be costly and complex for small businesses.
Pricing
Custom pricing based on size and services.
Hi Bob
Hi Bob focuses on modern HRIS with strong culture and engagement tools.
Key Features
- People analytics
- Employee engagement
- Time and attendance
- Onboarding
- Performance management
Pros & Cons
Pros: Modern UX, strong analytics and engagement features.
Cons: Payroll integration needs improvement.
Pricing
Custom pricing.
UKG
UKG provides comprehensive HR, payroll, and workforce management tailored for small to large businesses.
Key Features
- Payroll
- Timekeeping
- Talent management
- HR analytics
- Compliance
Pros & Cons
Pros: Powerful and scalable, good analytics.
Cons: Cost and complexity can be high.
Pricing
Custom pricing.
Factorial
Factorial is an easy-to-use platform designed for small businesses focusing on HR automation and compliance.
Key Features
- Time off management
- Employee records
- Document storage
- Performance reviews
- HR reporting
Pros & Cons
Pros: User-friendly and affordable.
Cons: Limited payroll features; integrations required.
Pricing
Starts at $5 per employee per month.
IntelliHR
IntelliHR focuses on people analytics and performance management.
Key Features
- Performance tracking
- Employee surveys
- Onboarding
- Workflow automation
- Reporting
Pros & Cons
Pros: Deep analytics, customizable.
Cons: Less comprehensive payroll features.
Pricing
Custom pricing.
Paylocity
Paylocity offers integrated payroll and HR tailored for medium-sized businesses.
Key Features
- Payroll
- Time and attendance
- Talent acquisition
- Learning management
- Employee self-service
Pros & Cons
Pros: Strong payroll and time tracking.
Cons: Some features better suited for larger SMBs.
Pricing
Custom pricing.
Workable
Workable is a recruiting and applicant tracking software designed for SMBs.
Key Features
- Applicant tracking system (ATS)
- Job posting
- Candidate sourcing
- Interview scheduling
- Reporting
Pros & Cons
Pros: Excellent recruiting features, user-friendly.
Cons: Limited HR and payroll functions.
Pricing
Starting at $99 per month.
Insperity
Insperity provides HR outsourcing, payroll, and benefits administration.
Key Features
- Payroll
- Benefits administration
- Risk management
- Recruiting services
- Compliance support
Pros & Cons
Pros: Full PEO services, integrated solutions.
Cons: Higher cost for very small firms.
Pricing
Custom pricing.
Justworks
Justworks offers PEO services with payroll, benefits, and compliance tools.
Key Features
- Payroll processing
- Benefits and insurance
- Compliance assistance
- Time tracking
- Employee self-service
Pros & Cons
Pros: Simplified PEO services.
Cons: Limited customization.
Pricing
Starts at $49 per employee per month.
GoCo
GoCo combines HR, benefits, and payroll in an easy-to-use platform for small businesses.
Key Features
- Onboarding automation
- Payroll integration
- Benefits administration
- Time off tracking
- Compliance tools
Pros & Cons
Pros: Good onboarding and compliance.
Cons: Payroll features depend on integrations.
Pricing
Custom pricing.
OnPay
OnPay specializes in simple payroll and basic HR features for small businesses.
Key Features
- Payroll processing
- Tax filings
- Employee benefits
- Time tracking
Pros & Cons
Pros: Affordable and straightforward.
Cons: Limited advanced HR features.
Pricing
$36 plus $4 per employee per month.
Bambee
Bambee offers dedicated HR management with a focus on compliance and employee relations.
Key Features
- HR management guidance
- Compliance monitoring
- Employee handbook creation
- Policy enforcement
- Employee relations support
Pros & Cons
Pros: Personalized HR support.
Cons: Best suited for compliance, lacks payroll.
Pricing
Starts at $99 per month.
Breathe
Breathe focuses on leave management and employee record keeping for small businesses.
Key Features
- Leave and absence tracking
- Employee database
- Document storage
- Reporting
Pros & Cons
Pros: Easy to use for leave management.
Cons: Limited payroll and recruiting.
Pricing
Custom pricing.
Features Comparison
| Software | Employee Database | Payroll Management | Time & Attendance Tracking | Leave Management | ATS | Employee Self-Service |
| BambooHR | Yes | Limited | Yes | Yes | Yes | Yes |
| Rippling | Yes | Yes | Yes | Yes | Yes | Yes |
| Gusto | Yes | Yes | Yes | Yes | Yes | Yes |
| Deel | Yes | Yes (Global) | Limited | Limited | No | Yes |
| Paycor | Yes | Yes | Yes | Yes | Yes | Yes |
| Trinet | Yes | Yes | Yes | Yes | Yes | Yes |
| Paychex | Yes | Yes | Yes | Yes | Yes | Yes |
| ZohoPeople | Yes | No | Yes | Yes | No | Yes |
| ADP | Yes | Yes | Yes | Yes | Yes | Yes |
| Hi Bob | Yes | No | Yes | Yes | Limited | Yes |
| UKG | Yes | Yes | Yes | Yes | Yes | Yes |
| Factorial | Yes | No | Yes | Yes | Limited | Yes |
| IntelliHR | Yes | No | No | Yes | No | Yes |
| Paylocity | Yes | Yes | Yes | Yes | Yes | Yes |
| Workable | Yes | No | No | No | Yes | Limited |
| Insperity | Yes | Yes | Yes | Yes | Yes | Yes |
| Justworks | Yes | Yes | Yes | Yes | Limited | Yes |
| GoCo | Yes | Yes | Yes | Yes | Limited | Yes |
| OnPay | Yes | Yes | Limited | Yes | No | Yes |
| Bambee | Yes | No | No | Yes | No | No |
| Breathe | Yes | No | No | Yes | No | No |
Common Mistakes to Avoid When Choosing HR Software
Ignoring integration needs
Failing to verify how well the HR software integrates with payroll, accounting, and other existing systems leads to inefficiencies and data silos.
Choosing based only on price
Selecting a software solely on cost may overlook essential features and quality support, resulting in a poor fit and additional future costs.
Overlooking scalability
Not considering whether the software can grow with the business may cause a costly and disruptive switch to new systems as needs evolve.
FAQs
Is Excel an HRIS system?
No, Excel is a spreadsheet tool and lacks automated HR functions like compliance tracking, payroll integration, and applicant management that an HRIS system offers.
Is there such a thing as a workforce management platform that does both HR and payroll for small businesses and does it well?
Yes, platforms like Rippling, Gusto, ADP, and Paycor effectively combine workforce management and payroll tailored for small businesses.
What’s the best HR and payroll software for a small business?
Top choices include Gusto for payroll excellence, BambooHR for comprehensive HR management, and Rippling for integrated workforce solutions.
What’s the best recruiting software for small business that doesn’t break the bank?
Workable offers strong applicant tracking and recruiting features with pricing options suitable for small businesses. Freshteam and Zoho Recruit are also affordable alternatives.