Running HR without an HR department in the United States
Reviewed by Mellow Editorial Team, HR & payroll content team
Running HR without a dedicated HR department is manageable if you build simple, consistent processes for the handful of areas that carry real legal and financial risk. Here is what to focus on.
Get hiring paperwork right from day one
Every new hire triggers a short but non-negotiable checklist. Before the first paycheck, you need:
- Form I-9 to verify work authorization. Complete Section 1 on or before the employee's first day; complete Section 2 within three business days. Keep it on file — you do not send it anywhere, but it must be available for inspection.
- Form W-4 to set federal income tax withholding. Without a completed W-4, you must withhold at the default rate. Hand it to your payroll processor as soon as it is signed.
- State new-hire reporting. Every state requires you to report new employees to a state agency, usually within 20 days of the hire date. This feeds into child support enforcement systems. Check your state's specific portal.
- State withholding form. Many states have their own equivalent of the W-4. Texas, Florida, and Washington have no state income tax, so this step does not apply there, but most states do require it.
Missing any of these creates penalties that are entirely avoidable.
Set up payroll before you pay anyone
Payroll is where compliance risk concentrates. The core obligations are:
- FICA taxes. You withhold 6.2% of each employee's wages for Social Security (up to the annual wage base) and 1.45% for Medicare, then match both amounts as the employer. High earners also trigger a 0.9% Additional Medicare surcharge on the employee side, though you do not match that portion.
- Federal income tax is withheld according to the employee's W-4 elections and the IRS withholding tables. The brackets run from 10% to 37%.
- Deposit and reporting schedule. You file Form 941 quarterly to report wages, tips, and taxes withheld. You must also deposit withheld taxes on a schedule the IRS determines based on your total tax liability — either monthly or semi-weekly.
- Year-end W-2s. You must furnish Form W-2 to each employee and file copies with the Social Security Administration by January 31 each year.
If you hire contractors rather than employees, the obligation is different: issue Form 1099-NEC for any contractor paid $600 or more in a calendar year, also by January 31.
A payroll provider handles the mechanics of deposits and filings, which reduces error risk considerably. If you want to see how this works across multiple states or countries, how Mellow runs payroll across six countries on one platform is a useful reference.
Write down your policies — even minimal ones
You do not need a 50-page employee handbook to run HR responsibly. But you do need written policies in a few areas:
- At-will employment. Most US employment is at-will, meaning either party can end the relationship at any time for any lawful reason. State this clearly in your offer letter and handbook.
- Leave. There is no federal statutory paid vacation or paid sick leave. However, several states and cities mandate paid sick leave, so check local law. Document whatever leave you do offer so employees and managers apply it consistently.
- Anti-harassment and anti-discrimination. Federal law and most state laws prohibit harassment and discrimination on the basis of protected characteristics. A written policy, a clear reporting process, and prompt investigation when issues arise are your best defense and the right thing to do.
- Non-competes. If you are in California, non-compete clauses in employment agreements are broadly unenforceable. Other states vary significantly — get legal advice before including one.
Keep policies in a shared, accessible location and update them when the law changes.
Manage records and retention
You are legally required to retain certain employment records for defined periods. Federal law generally requires you to keep payroll records for three years and I-9 forms for three years after hire or one year after termination, whichever is later. Some states impose longer retention requirements. A simple shared folder with a consistent naming convention is enough to start.
Know when to bring in help
Running HR yourself is feasible at small headcount. The practical threshold for most founders is around 10 to 15 employees — at that point, the administrative volume and the variety of issues (leave disputes, accommodation requests, performance management) typically justify either a part-time HR consultant, an HR platform, or a fractional HR professional.
Even before that threshold, certain situations call for outside advice: a termination with potential discrimination exposure, a workers' compensation claim, or a classification question about whether someone should be an employee or a contractor. Getting those calls wrong is expensive. A few hours of legal or HR consulting is not.
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