As a burgeoning small business, it is integral that you have a comprehensive human resources department to source and mine talented job seekers, to mitigate legal ramifications due regulatory ignorance, and to simply connect new hires with their benefit plans. However, there are many HR mistakes that are not only costly, but may have legal consequences. Here are some of the more common cash draining mistakes that are much too common:

Your complicated hiring process can cost you $50,000. Complicated hiring processes include confusing job descriptions, poor vetting of potential candidates, and using hiring platforms that attract low caliber candidates. Rectify this by simplifying the hiring process with online HR tools, and using a consistent interview process that will efficiently showcase the candidate’s soft and hard skills. It’s important to note that it starts with a clear job description – you want the candidate to recognize exactly how they are going to contribute to your business. Include must have qualifications, information about your company, and emphasize the highly unique abilities that are required to succeed.

You can be fined if you do not follow governmental regulations. Fines and penalties can easily occur if you ignore regulations and compliance clauses. This is especially true for smaller companies that rely on nepotism to recruit workers. Familiarity can help foster a cohesive work environment, but sometimes in the expense of ignoring regulations. There are several advocacy groups and forums that are treasure troves for small businesses who may be confused about their local regulations.

The taxman will hunt you down if you misclassify your employees. To avoid heavy taxes, many small businesses hire contractors instead of actual employees. This type of miscategorization will eventually result in penalties, especially when employees need to file taxes or apply for certain types of insurance. Note that for a contractor to actually be deemed as a independent contractor, they need to work in a setting where your company does not dictate how they use their skills, the company does not directly control the worker’s payables, and the company does not have a viable written contract or provide any type of employee bonuses and benefits.