Most guides to HR software for small businesses are really feature lists. This one is about the three things that actually decide whether it works: what it costs, who owns it, and how you move onto it without losing anything.
If you want the ground-level explanation of what a cloud HR system is and the security questions worth asking, that is a separate guide. This assumes you have got that far and are deciding whether to go ahead.
It isn't really a software decision
The businesses that get value from HR software and the ones that quietly stop logging in after six weeks rarely chose different products. They differed in whether one named person owned it.
That is the uncomfortable part, because it is the bit no supplier can sell you. A system is a place to put records; somebody still has to put them there and keep them current. If nobody owns it, you end up with a subscription and a spreadsheet, which is worse than either on its own.
What it actually costs
There are three costs, and suppliers only quote the first.
The subscription. UK small business HR software is usually banded by headcount rather than charged per user, which is worth knowing because per-user pricing punishes you for hiring. For a concrete example, ours runs:
| Team size | Monthly | Billed annually |
|---|---|---|
| 1–10 employees | £15 | £12/mo |
| 11–20 | £32 | £26/mo |
| 21–50 | £79 | £63/mo |
| 51–100 | £145 | £116/mo |
| 101–150 | £325 | £260/mo |
| 151–200 | £550 | £440/mo |
Other suppliers price differently and some are cheaper. The shape is what matters: a small team should be spending tens of pounds a month, not hundreds, and if a quote runs into four figures for twenty people you are being sold something built for a different kind of business.
The setup. An afternoon, for most small businesses. Not a project, not an implementation, and if a supplier proposes a paid onboarding package for a twenty-person company, ask precisely what it includes.
The ownership. The real one. Perhaps twenty minutes a week for somebody to approve requests, file documents and act on what is about to expire. That time was already being spent - it was just scattered across an inbox instead.
When it pays for itself
The honest arithmetic is not "saves you ten hours a month", because nobody can know that about your business. It is narrower and easier to check.
Take the last time somebody asked you for a record while they waited - an insurer, a client doing due diligence, an inspector, an employee querying their holiday. How long did it take to produce, and how many times has that happened this year? That is the recurring cost, and it is the one software actually removes.
There is a sharper version if you employ anyone near the minimum wage. Minimum wage records created on or after 1 April 2021 must be kept for at least six years, and you must be able to produce the records for a single pay reference period in a single document (source: GOV.UK — Employers and the minimum wage). Checked 9 September 2026. If your hours live in one file and your pay in another, you cannot satisfy that quickly, and HMRC does not have to give you notice.
Who owns it internally
Pick the person before you pick the product. In a small business it is usually the office manager or operations lead rather than the owner, and that is generally the right call - the owner is the least likely to keep it current.
Two things make the difference. Give them the authority to insist that leave requests go through the system rather than by text, because the moment there are two routes there are two versions of the truth. And make sure at least one other person can cover, or a fortnight's holiday becomes a fortnight of nothing being filed.
Rolling it out without disrupting anyone
What you need is what you already have: names, start dates, entitlements and current balances. If your spreadsheet is in reasonable order, that is the whole input.
The fiddly part is opening balances, and it is worth understanding why. Your spreadsheet holds a number that is the result of a year of additions and subtractions, some of which were adjustments nobody wrote down. Type that number into a new system and it becomes the starting point, so any drift in it becomes permanent.
Which is why the useful moment to move is the start of a leave year, when balances reset and there is nothing to carry. The second best moment is now, having spent an hour checking the balances you are about to carry across rather than trusting them. There is a fuller version of this argument, including when to stay on the spreadsheet, in our guide to moving off spreadsheets.
What to do in the first month
- Week one. Put everybody in with start dates and balances. Do it with the old file open beside you rather than delegating it.
- Week two. Switch holiday requests over and tell people plainly that the old route has closed. This is the step most often fudged, and fudging it is what creates two systems.
- Week three. Attach the documents that expire. Not everything - just the things with dates on them, because that is where the value is.
- Week four. Check the first month's figures against what the spreadsheet would have said. If they disagree, you have found something worth knowing either way.
When not to buy it
We would rather say this than sell you a login you stop using.
If you employ five or six people, everyone works fixed hours, one person maintains the records, and nothing in your files carries a renewal date, HR software will not make your life better. It will give you a monthly cost and another thing to keep current, for a problem you do not yet have.
Come back when one of those stops being true. In practice it is usually the first hire on variable hours, the second person who can approve leave, or the first certificate that expires without anybody noticing. Any one of those is a better reason to buy than a feature list.
If you have reached that point, our pricing is public and there is a free trial. The useful test is not clicking around demo data - it is setting up one real employee properly and seeing how long it took.
Frequently asked questions
How much does HR software cost for a small business?
For a UK small business, expect a monthly subscription banded by headcount rather than a per-user fee. HR Henry runs from £15 a month for up to 10 employees to £550 for up to 200, with roughly 20% off for paying annually. The subscription is rarely the expensive part - the afternoon of setup and the person who owns it afterwards matter more.
Is HR software worth it for a business with fewer than 20 employees?
It depends on what your records do rather than how many people you employ. If everyone works fixed hours, one person keeps the file and nothing expires, a spreadsheet is still reasonable. If hours vary, several people approve leave, or documents carry renewal dates, the case is strong at almost any size.
How long does it take to set up?
For most small businesses it is an afternoon rather than a project. Names, start dates, entitlements and current balances are usually the entire input. Adding people one at a time takes a couple of minutes each, so thirty people is a genuine afternoon.
When is the best time to switch?
The start of a leave year, when balances reset and there is nothing to carry across. Failing that, switch now but spend an hour checking the opening balances first, because whatever you type in becomes the new starting point and any drift in it becomes permanent.
Will HR software replace an HR person?
No. It removes the admin - the chasing, the recalculating, the searching - and it will tell you when something is about to lapse. It will not handle a grievance, judge whether a dismissal is fair, or decide what to do about a difficult absence pattern. Those still need a person, and sometimes an adviser.
Do we need to move everything at once?
No, and it is usually a mistake to try. Most people start with employees, holiday and absence, because that is where the current arrangement is under most strain, then add documents and training once the basics are running.