You’ve got a solid business idea, some traction, and a small crew keeping things running. Life’s good. But then you start noticing cracks. Someone missed payroll paperwork. Another team member is upset about unclear benefits. A new hire quit after two weeks because onboarding was a mess.

If this sounds familiar or is a situation you’re worried about developing, you’re not alone. Many start-up founders hit this wall where the scrappy, figure-it-out-as-you-go approach stops working. The question isn’t if you need HR—it’s when.

Let’s break down the signals that tell you when it’s the right time to form an HR team, what that looks like at different stages, and how to do it without breaking the bank.

The Early Days: When You’re Just Getting Started

At the very beginning, you probably don’t need a full HR team. You’re wearing multiple hats—CEO, janitor, marketer, accountant—and that’s fine. Most start-ups begin with fewer than 10 people, and in this phase, founders handle the people stuff themselves.

But even now, you need these basics in place:

• clear job descriptions so people know what they signed up for
• an onboarding checklist to get new hires up to speed quickly
• basic compliance knowledge around employment laws, taxes, and contracts

You don’t need a dedicated HR person yet, but you do need systems. Think of it as laying the foundation before the walls go up.

The Tipping Point: 15–25 Employees

You might start feeling HR pain between 15 and 25 employees. This is the point when you have too many employees to manage on your own without letting other essential business duties fall by the wayside. Suddenly, managing schedules, handling conflicts, and keeping track of who’s doing what becomes a full-time job in itself.

If you don’t jump to address your growing pains at this stage, you might notice many issues. For one, there could be increased turnover because people don’t feel supported. There will probably be confusion around policies since nothing’s written down. Another concern is the legal risk you take as compliance requirements grow but your in-house management doesn’t.

This is the sweet spot to bring in your first HR hire. It doesn’t have to be a full team—just one person who can own the people operations side of things. They’ll handle recruiting, onboarding, policy creation, employee relations, and everything else that falls under the HR domain. They can be your go-to for anything people-related.

What Does Your First HR Hire Look Like?

Your first HR person should be a generalist. You need someone who can juggle multiple responsibilities without getting overwhelmed.

Here’s what they’ll probably handle:

• recruiting and hiring: posting jobs, screening candidates, coordinating interviews
• onboarding: getting new hires set up with equipment, paperwork, and training
• policy development: creating an employee handbook and updating it as you grow
• compliance: staying on top of labor laws, tax filings, and benefits administration
• employee relations: mediating conflicts, answering questions, and keeping morale high

You should look for traits like adaptability, problem-solving skills, and a genuine interest in people. And you don’t have to execute the search on your own. It’s important to hire the right person, and you might not have the bandwidth to dedicate the time it takes to do so. Instead, you can partner with either a contingent or retained search firm to secure a talented individual who knows how to navigate the often choppy waters of start-up operations.

When To Expand Beyond One Person

Once you hit 50–75 employees, one HR person won’t cut it anymore. You’ll need specialists to handle different areas like talent acquisition, employee development, and benefits management.

At this point, consider building a small team with these defined roles:

• HR manager or director: oversees the entire function and reports to leadership
• recruiter or talent acquisition specialist: focuses solely on attracting and hiring top talent
• HR coordinator or generalist: handles day-to-day tasks like onboarding, payroll support, and employee inquiries

As you scale past 100 employees, you might add roles like an HR business partner, compensation analyst, or learning and development manager. The structure depends on your industry, growth rate, and specific challenges.

Red Flags That You’re Waiting Too Long

Some founders put off hiring HR because they think it’s a “nice-to-have” rather than a necessity. That’s a mistake. Here are some red flags that indicate you’ve waited too long:

• High turnover: People are leaving faster than you can replace them.
• Compliance issues: You’ve received warnings or fines for labor law violations.
• Inconsistent pay: Employees doing similar work earn wildly different salaries.
• Poor morale: Your team feels unsupported, overworked, or undervalued.
• Recruiting bottlenecks: You can’t hire fast enough to keep up with growth.

Ignoring these signs costs you more in the long run. Losing top talent, paying legal fees, or damaging your employer brand are all avoidable with the right HR support.

Building HR on a Budget

Start-ups don’t always have cash to spare, but building an HR team doesn’t have to drain your resources. Here are some cost-effective options:

• Hire a part-time HR consultant: They can set up your policies, handbook, and compliance frameworks without a full-time salary.
• Use HR software: Tools like Gusto, BambooHR, and Rippling automate payroll, benefits, and onboarding tasks, freeing up time for more strategic work.
• Outsource to a PEO: Companies like TriNet and Justworks handle HR, payroll, and benefits administration for you, which is great if you want to focus on growth.
• Train an existing team member: If you have someone with HR experience or interest, invest in their development. They can grow into the role as your company scales.

The goal isn’t perfection—it’s progress. Start small, build systems, and invest in HR as your company grows.

The Bottom Line

There’s no magic number that tells you when it’s the right time to form an HR team. However, most start-ups benefit from bringing in their first HR hire somewhere between 15 and 25 employees. Beyond that, you’ll want to expand the team as you scale, adding specialists to handle recruiting, compliance, and employee development.

A strong HR function protects your business, supports your people, and sets you up for sustainable growth. Don’t wait until things fall apart. Start building your HR foundation now, and you’ll thank yourself later.