5 HR Items You Don’t Want to Overlook (But Many Small Businesses Do)
When you’re running a small business, HR tends to take a backseat to more urgent priorities like sales, client work, or day-to-day operations. With a small team, it’s easy to assume you don’t need a formal process for things like onboarding or employee policies. However, overlooking even basic HR items can cost your business time and money and create legal risks.
Here are five HR essentials that often get missed by small business owners but deserve your attention.
1. Accurate, Up-to-Date Job Descriptions
Job descriptions are often written once and forgotten. But roles evolve, and as they do, your documentation should reflect those changes.
Clear, updated job descriptions help set expectations, define responsibilities, and serve as a baseline for performance reviews. If a conflict arises or you need to justify a termination, having a written job description that outlines key duties can protect you. It also supports fair hiring practices by ensuring you’re evaluating all candidates against the same criteria.
Make it a habit to review and update job descriptions at least once a year or whenever a role changes significantly.
2. A Compliant Hiring and Onboarding Process
It’s tempting to “wing it” when hiring your first employee. You might skip formal offer letters or delay collecting required forms. But small missteps here can create big headaches later.
A compliant hiring process should include:
A legally sound job posting
Proper classification (employee vs. contractor)
Offer letters with details of compensation, benefits, and time off
Completed I-9 and W-4 (or 1099) forms
Background checks, if applicable
Beyond the paperwork, don’t overlook onboarding. A new hire’s first few weeks shape how quickly they get up to speed and how connected they feel to your business. Even a basic checklist for onboarding tasks, tech setup, and team introductions can make a significant difference.
3. Correct Worker Classification
Misclassifying an employee as an independent contractor is one of the most common and costly HR mistakes small businesses make. Just because someone prefers to be paid as a 1099 (or you prefer it to save on not paying employment taxes) doesn’t mean it’s legal.
The IRS and state agencies have strict rules about classification based on control, independence, and financial relationship. Misclassification can result in back taxes, penalties, and wage violations.
If you’re unsure whether someone should be classified as an employee or contractor, don’t guess. Use official guidelines or consult a qualified professional to be safe. (Check out this blog for more details.)
4. A Basic Employee Handbook or Policy Set
Some small business owners believe handbooks are only for companies with 50 or more employees. In reality, every business, no matter how small, benefits from written policies.
A handbook doesn’t need to be 30 pages long. Start with a short document covering the essentials: attendance, time off, holidays, code of conduct, anti-harassment, and how to handle complaints.
Written policies provide clarity for your team and protect you in the event of disputes. They also show your business is legitimate and prepared, which can help attract and retain talent. (This article shares more on the importance of a handbook for small businesses.)
5. Consistent Performance Feedback
Most small businesses don’t have formal performance reviews. And while rigid review systems can feel unnecessary for a small team, having no structure at all leads to missed opportunities for growth.
Employees want to know how they’re doing. Regular check-ins—monthly or quarterly—create space for honest conversation, goal setting, and early problem solving. Waiting until there’s a performance issue to offer feedback is a recipe for frustration on both sides.
You don’t need a complicated system. Block time for one-on-one conversations, ask how things are going, and share what’s working and what could improve. A little consistency goes a long way. (Read more here on How Frequent Feedback Drives Results.)
Small businesses often run lean, and it’s natural to focus on what feels urgent. But neglecting these foundational HR tasks can catch up with you in ways that are expensive and stressful.
You don’t need a full HR department to cover your bases. With a bit of structure and regular attention, you can put smart, scalable HR systems in place that support your people and protect your business.
Start with one or two of the items above, and build from there. The earlier you create good habits, the easier they are to maintain as your business grows.
Looking for more HR clarity for your small business? The Team Solution Series guides you through everything from hiring to exits.
Welcome to Joy of Pursuit!
Pursuing your small business goals can be challenging.
Whether you are a company of one or have a team, I can assist you with building the small business of your dreams.
Meet Amanda
