Your employees are one of your greatest assets. You must protect and manage that asset efficiently, but mention “HR” to a room of business professionals and you’ll likely hear sighs, groans, or murmuring. Human resources is one of the more complicated aspects of running a small business. It can be time consuming, frustrating, and complex. It’s full of constantly changing laws and regulations. In fact, it is often seen as one giant complaint department.

On the other hand, it is a critical part of running a scalable business. When you can adequately protect, manage, and work together with your employees, you can do just about anything.

This simple HR guide to running a small business gives you the basics of what is needed from an HR standpoint when running a small business that will allow for scalability in the future.

Let’s start with the basics. There are three basic elements to any HR office, even if you have less than 10 employees.

  1. Employee Files:

    You must keep three specific files for each employee in your business.

  •     I-9 File: Keep all of your employee I-9 files together, in one file, instead of under individual employee names.
  •     Employee General File: This is a file you create for your own benefit. It may contain their original application, resumes, reviews, disciplinary action, training verification, evaluations, W-4 forms, payroll details, etc.
  •     Employee Medical File: These files are also individual employee files, but because they contain medical information they should be kept separate from other files. Be sure to keep them in a locked and secure place.
  1. Employee Handbook

    Having an employee handbook is a must, not a luxury. It’s critical to setting clear standards of what you expect and can protect your business in case there is a dispute. It can be simple, but must include a few basics:

  •     General Employment Information: Your business will have its own policies concerning work ethic, employee reviews, termination, records, etc. These are specific to your company and should be clearly defined.
  •     Compensation and Benefits: Outline salary or compensation levels and benefits that you provide, and what it takes to qualify for them.
  •     Work Schedules, Vacation, and Leave: Outline your business’s policy on work schedules. What will the policy be on absences? What about employees who are late? How do they take vacation or leave? Even if you have a “flexible” work schedule, you need to write down any expectations you have of your employees.
  •     Standards of Conduct: This might include dress code, behavior, online and computer use during work hours, etc. This should also include the disciplinary action if these standards aren’t followed.
  •     Safety and Security: Lay out how you will keep employees feeling safe at work, both physically and emotionally. This includes compliance with OSHA and policies on emergency situations, computer security, social media, threatening behavior, etc.
  •     NDNA:  If you have trade secrets, use a non-disclosure agreement to protect them
  •     Anti-Discrimination Policies: If your business is in the U.S., you need to comply with the ADA and other discrimination laws.

Make sure each employee receives a copy and signs a statement acknowledging that they received, read, and understand the employee handbook. Keep that signed statement in their file.

  1. Display Required Posters

    This is perhaps the easiest part of HR. There are various posters that may be required to display in your office. These vary from place to place but generally include things like safety notices, best practices, employee rights, etc. Check with your state to be sure you’ve been the poster requirements.

These are just the three basic tasks to get your HR department started on the right track. There’s also the responsibility of hiring, firing, extending discipline, dealing with interpersonal issues, discrimination, and so.much.more.

As a small business owner, it’s pretty easy to feel overwhelmed. Having your HR program in order early helps you be ready for growth as it comes and deal with the inevitable problems that will come your way.


With all of the different things that go into growing your small business, HR can often get overlooked. Here are some tips to help you own your HR.