HR Options and Costs for Small Businesses

Trying to figure out what kind of HR support your business actually needs?

Most businesses have four basic options: HR software, a PEO, outsourced HR support, or an internal HR hire.

Each can be the right choice. The goal is to solve the problems you actually have without paying for more support than you need.

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HR professional guiding small business growth

Which HR Option Fits You?

Start with the problem you are actually trying to solve.

HR Software

Best when your main needs are payroll, PTO, employee records, onboarding administration, and basic HR organization.

Good fit if:
• You mostly need a system to keep HR information organized.

HR Software

PEO

Best when you want payroll, benefits, workers’ compensation, and compliance administration bundled together.

Good fit if:
• You want administrative HR functions handled through one provider.

Outsourced HR Support

Best when the challenge involves people, judgment, or difficult decisions. This may include manager support, employee issues, employee documentation, performance concerns, policies, terminations, or building practical HR systems.

Good fit if:
• You need experienced HR guidance, but not a full-time HR employee.

Internal HR Hire

Best when your business has enough ongoing HR work to justify a dedicated person.

Good fit if:
• You need HR support inside the business every day.

Sometimes the Right Answer Is a Combination

Many small businesses use more than one HR solution.

You might use payroll or HR software for administration, then bring in outside support for employee issues, managers, documentation, policies, or difficult decisions.

The cheapest option is not always the most cost-effective if it does not solve the actual problem.

The right solution gives you the support you need without adding unnecessary overhead.

What Do These Options Cost?

Costs vary by provider, employee count, location, and complexity. These ranges are a practical starting point.

HR Software

Typical cost: approximately $6 to $15+ per employee per month, often plus a base fee.

Best for: payroll, PTO, employee records, onboarding, and basic HR administration.

Limitation: Software can organize and automate. It cannot make judgment calls, coach a manager, handle a difficult employee issue, or decide what documentation is appropriate.

PEO

Typical cost: approximately $40 to $160 per employee per month in administrative fees, or sometimes approximately 2% to 12% of payroll, depending on the provider and arrangement.

Best for: bundled payroll, benefits, workers' compensation, and compliance administration.

Limitation: A PEO may still leave you needing help with managers, employee issues, performance, documentation, or day-to-day people decisions.

Outsourced HR Support

Typical cost: often project-based or monthly, ranging from several hundred dollars to several thousand dollars depending on scope and complexity.

Best for: Best when the challenge involves people, judgment, or difficult decisions, including manager support, employee issues, performance, documentation, policies, terminations, and practical people systems.

Limitation: outsourced HR usually complements payroll and HR software rather than replacing them.

Internal HR Hire

Typical cost: Best when there is enough ongoing work to justify a dedicated internal HR employee.

Best for: businesses with enough ongoing HR work to justify a dedicated internal HR person.

Limitation: this is the highest fixed-cost option, and one HR person may still need outside specialists.

Not sure which option fits?

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Important Cost Notes

These are general market ranges. Actual costs vary by provider, location, employee count, scope, and complexity.

What Might This Look Like for a 20-Person Business?

HR Software

Roughly $200 to $500 per month

PEO

Roughly $800 to $3,200 per month in administrative fees

Outsourced HR Support

Could be a one-time project or ongoing monthly support depending on the need

Internal HR Hire

Roughly $5,000 to $8,000+ per month in salary alone, before payroll taxes and benefits

What Does Working With Lean in HR Cost?

HR Diagnostic

$1,500

A focused review of your current people practices, risks, and priorities, with practical recommendations for what to address next.

HR Foundation Projects

Starting at $2,500

Project pricing depends on scope.

Projects may include hiring and onboarding, employee documentation, policies, handbook work, performance processes, manager tools, compliance cleanup, and other foundational systems.

Ongoing HR Support

Customized based on support level

For businesses that want experienced support without adding a full-time internal hire.

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★★★★★

"Lean in HR helped us understand our options and choose the level of HR support that actually fit our business."

- M. Rolli, Rolli Worx Signs

Not Sure Which Option Fits Your Business?

You do not need to figure it out before you reach out. We can talk through what is happening in your business, what support you already have, and what level of HR help actually makes sense.

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