In every HR audit I do, one of the first questions I ask is: tell me about your HR payroll software. And if there’s a pause, I follow it with the gentler version — or if you don’t have one, that’s fine. How do you pay payroll?
I have a friend who owns a restaurant and is still writing paper checks. It’s 2026. No shame — but let’s save you some time and some sanity. If you have one employee, you have to pay them somehow. That makes HR tech your problem, no matter how small you are.
Here’s what I’ve learned auditing HR systems for small and mid-sized businesses: the tech is almost never the real issue. The issue is the wrong tool, at the wrong stage, with no process behind it. So before you buy anything new, we audit what you already have.
Start With the Five Core Functions
There are five things an HR payroll system should actually do for you. Everything else is a nice-to-have.
Payroll processing. None of these systems matter if payroll isn’t accurate, on time, and compliant with state and federal law. When payroll is wrong, employees lose trust — and people who don’t trust you don’t bring their best work.
Employee records. Secure, cloud-based storage for personnel files, I-9s, tax documents, direct deposit information, emergency contacts, and performance documentation. Medical and benefits documentation is also an employee record — but it gets stored separately. There are actual laws around records retention. “Nobody’s ever going to look” is not a records strategy.
Time and attendance. Hours, overtime, and — the one everybody skips — PTO balances. If your vacation and sick banks live in a spreadsheet that Stephanie updates on the third Thursday of the month, that data is not accurate. You need it tracked in real time, in your system, for salaried employees too.
Benefits administration. Initial enrollment, open enrollment, changes, and carrier connections. (More on this in a minute — don’t buy the module until you read the section on your broker.)
HR workflows. Applicant tracking, onboarding, offboarding, document routing, and approvals. Who approves what, in what order, in what system.
That’s the baseline. Beyond it, think about where e-signatures live, where communication and culture happen (Teams, Slack, email, intranet), how shift scheduling works if you have shift workers, and whether your applicant tracking talks to your payroll system at all. Never buy an HR payroll platform that doesn’t integrate with the shift software you already run — otherwise you’ve just bought yourself manual data entry.
Most small businesses have all of this spread across three to six tools. That’s the problem. The data doesn’t talk. There’s manual re-keying. There are errors. And nobody owns the whole system — people use pieces of it, but no one is the super user. There’s no single source of truth for employee data.
Audit What You’re Already Paying For
Before you shop, pull the contract. For every people-related tool you’re currently paying for, answer four questions: What does this tool do? What does it cost, and how often are they raising the price? Who is actually using it? And are we using it for what we bought it for — are we paying for modules we never turned on?
I ask clients for their bill, every time, because I want to see it for myself. Over and over I find companies paying for modules they never activated. And they’re frustrated with the tech company, and honestly? So am I. But here’s what usually happened.
Implementation is like a gym membership. The gym sells you the membership, and if you don’t show up next month, the gym doesn’t call and say we missed you. They don’t care whether you use it. They care whether you pay the bill.
During implementation somebody asked you, do you have performance reviews you’d like us to load in? And you said, not yet, I’ll get them to you. And then you got busy. Or they asked you to define your bereavement leave policy so they could build your leave categories, and you needed to make a decision first, and you forgot. Or they asked for your benefits details and you needed to call your broker, and the broker didn’t call back, and you forgot to follow up. Five years later, you’re paying for it and not using it.
You have to be the one who audits it. That’s the whole job.
What You Actually Need at Each Stage
Stage 1: Under 10 employees. This is going to be piecemeal, and that is completely fine — my own business is here. QuickBooks Online works for payroll if you already run it as your accounting system (it’s an accounting system, not a great payroll company — but it’s an easy add-on, and it will do tax paperwork, I-9s, and state and federal reporting if you’ll actually use those features). Gusto is a solid, affordable alternative. Keep records in a secure, cloud-based drive — OneDrive or Google Drive — not on somebody’s desktop, and with permissions locked down. Time tracking through your payroll system, or Homebase, ClockShark, Toast, or Buildertrend depending on your industry.
Stage 2: 10 to 30 employees. This is where piecing it together starts to cost you real money. It’s time to stop running five systems. Rippling is worth a look — it handles HR and IT together in a way most HR payroll platforms don’t. Gusto still works here. BambooHR and HiBob get good reviews. This is also where performance reviews should go electronic — but resist buying a separate system for it. Every conference vendor wants to sell you one more login. Every login you add is one more part-time job you’ve handed your employees on top of the job you actually hired them for.
Stage 3: 30 to 100+ employees. Now you need a real HRIS. UKG Ready, ADP Workforce Now, Paycom, Paylocity — honestly, they all offer roughly the same thing in different packaging. The software is not the differentiator. Service and support is. The sales process will be excellent, because sales gets paid on sales, not retention. Then the account gets handed off and you’re calling an 800 number, because at your size you’re not a big enough account for them to care. Choose based on who is going to answer the phone in year three, not who has the prettiest demo.
Make Your Benefits Broker Bring the Technology
Once you’re required to offer medical coverage, you need enrollment software. Before you buy a benefits module or a standalone platform, ask your broker one question: do you have a partnership with a benefits enrollment platform, and can you get me a discount?
I spent years inside insurance — as a COO, a VP of operations, and a CMO — so I know how the sausage is made. Your broker is getting paid off of you, especially once you add dental, vision, and other ancillary lines. The carrier will often credit some or all of the cost of enrollment technology. Employee Navigator, for example, gets brought to the table by brokers constantly. I have one broker partner I trust with small and mid-sized businesses, and they bring Employee Navigator in for under two grand a year. Some of you are paying that much a month. Don’t buy it by yourself before you ask.
And a Word on PEOs
A PEO — professional employer organization — is a co-employment model. They run payroll, benefits, and compliance for you. That sounds great, and for some businesses it is. But it means less control, ongoing cost, and a relationship that is genuinely hard to exit.
I’m not anti-PEO. I’m anti-signing-something-you-don’t-understand. If you’re between 10 and 50 employees and someone is pitching you a PEO, it’s worth evaluating — carefully, and with someone who has no commission riding on your answer. I broke the whole thing down in a podcast episode: Is a PEO the Right Choice for Your Business? (https://youtu.be/7rArDKXHF98)
The Infrastructure Behind the Infrastructure
Technology is only as good as the process behind it. You can’t set up an applicant tracking system to screen for minimum qualifications if you don’t have clear job descriptions defining what those qualifications are. You can’t automate performance reviews if you haven’t decided whether you use a three-point or a five-point scale, whether the employee self-evaluates, whether the manager or the employee sees it first, and whether there’s a sign-off. I have seen companies with best-in-class HRIS platforms running completely chaotic HR operations — because nobody documented how to use the tool, when to use it, or who owns what. The system cannot fix a process you never built.
So here are the five SOPs every small business needs documented, with or without HR technology. I don’t care if you have three employees.
New hire workflow — from offer accepted to day one. What gets sent, by whom, in what order, in what system. A checklist.
Offboarding workflow — from notice given to final paycheck. Every system access to revoke, every document to collect. A checklist.
Payroll process — who runs it, when, when it gets checked, and how errors get corrected. If only one person knows how to run payroll in your company, that is a serious problem. Two people need to know how. It needs to be documented — so that person can have surgery, or take a vacation, without your payroll being held hostage.
Leave request process — how leave is submitted, approved, tracked, and reflected in payroll. This is where I see the most discrimination claims come in, and almost always because there was no standardized process.
Personnel file management — what goes in the file, where it’s stored, who has access, and the retention schedule. Once a year, send everyone in to update their emergency contacts, beneficiaries, address, and certifications.
Format doesn’t matter. Google Doc, Notion, Asana, OneDrive, a plain Excel sheet you pass around. It needs to be written down, findable, followed, and updated when the process changes. That’s it. If you don’t have one, open up an AI tool and start talking: here’s how I run this process — ask me questions, tell me where the holes are, and document it. That’s a great place to start.
Where to Start
You don’t need every system to be perfect. You need to know that they exist, know whether they exist in your business, and be working on the gaps.
There are twelve months in a year. Pick one system a month, put it on the calendar, and knock it out. Your people deserve an employer who’s navigating with intention — and “I didn’t know” isn’t a defense the Department of Labor accepts.
Mentioned in This Post
Gusto (partner discount): https://gusto.com/r/kerri2784750b
Rippling — I’m a Rippling partner, but there’s no public link. Reach out and I’ll connect you: saltandlightadvisors.com/contact
Is a PEO the Right Choice for Your Business? (podcast episode): https://youtu.be/7rArDKXHF98
HR Foundations course ($49): saltandlightadvisors.com/hrfoundations
HR Operating System course ($69): saltandlightadvisors.com/hroperatingsystem
If you can’t answer “what modules are we actually paying for?” off the top of your head, take the free HR Audit — in 5 minutes it’ll show you exactly where your people systems are leaking time, money, and compliance risk. saltandlightadvisors.com/hraudit
Resources to keep building:
🎯 Take the free HR Audit — Score your HR systems in 5 minutes and see exactly where your gaps are.
👉 saltandlightadvisors.com/hraudit
🎙️ Listen to Don’t Waste the Chaos — The podcast for small business owners building strong people operations. 👉 https://www.youtube.com/@Dontwastethechaospodcast
📖 Get The HR Easy Button — Kerri’s book on building HR systems that actually work for small businesses. 👉 https://amzn.to/4cPyrFh
✉️ Subscribe to the newsletter — Weekly HR insights for founders, in your inbox every Monday.
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