WHAT IS A PEO?
Professional employer organization also known as PEO is a type of human resource outsourcing company that provides professional and experienced staff for human resource services. PEO cost-effectively outsources the management of human resources, provide employee benefits and payroll. PEOs provide strategic services to perform administrative tasks for your business.
How Does a PEO Work?
PEO is HR department that you can hire to handle marketing and sales of your business. Peo is a type of co-employment which performs HR duties on behalf of the business. PEOs manage payroll, employee benefits, HR responsibilities of the company’s employees. Those employees receive tasks and responsibilities from the company, but the PEO is responsible for administering payroll and benefits.
A PEO handles the following duties for any given company;
PEOs can process payroll by paying local, state, and federal employment taxes. They can calculate tax contributions, and direct deposits, and deliver on-time payments while handling other issues related to data entry and errors.
PEOs usually handle employee benefits such as insurance, health, and dental care. A PEO helps companies to understand employee benefits packages and provide the employer with high-quality and cost-effective processes.
Compliance experts of PEOs protect your business from fines and penalties. There are several rules and regulations to follow in the departments of payroll tax law, insurance, hiring, and HR compliance. Global PEOs can help companies to operate in full legal compliance.
Safety and Precautions
PEOs provide audits and training programs for workers compensation insurance. They may also assist with Occupational Safety and Health Administration (OSHA) inspections.
HR experts provide basic services and support for the team and deal with the PEO partners in a strategic manner.
Some PEOs provide recruiting and hiring facilities, employee training programs and performance management.
Benefits of PEO
There are many benefits of using a PEO;
- A positive ROI
- Faster growth rate
- Better employee retention
- Competitive benefits
- Health insurance benefits
- Insurance offerings for small businesses
- Improved compliance
- Reduce risk
What kind of businesses benefit from PEOs
Small and medium scale businesses tend to opt for co-employment. PEOs are a good fit for large scale organisations too.
- Real estate and property management
- Computer services and technology
- Security brokers and dealers
- Engineering services
- Health services
- Legal services
- Management consulting services
- Business services
- Accounting, auditing and bookkeeping
- Plumbing, HVAC, electrical and other trades
- Nonprofit organisations
How it can help your Business?
Business owners who turn to PEOs for support can focus on core competencies, creating, enhancing products and services. PEOs can help with routine administrative human resource tasks and compliance requirements so you can focus on the strategic, revenue-building aspects of your business.
- It can help your business by lowering benefit costs. They offer hundreds of high quality benefits at competitive prices.
- PEOs provide workers compensation assistance. They handle claims and help you implement safety measures in order to lower risks.
- PEO provides HR support and peace of mind. From compliance to employee relations to a pandemic, a PEO can help you make important and difficult employment-related decisions.
- A PEO can provide health insurance and other perks for employees while any HR outsourcing will just administer existing benefits.
What Is the cost of hiring a PEO?
Each PEO charges different fees. Some work on a fee structure and others work on a percentage of the total payroll. To get the right estimate, you’ll need to provide a PEO with the details of your business and what you want from their services. The more services you require the more it will cost. This includes;
- The number of employees
- The existing benefits
- What services you want from PEO
How to find the right PEO
When you are looking for the right PEO service you need to consider other factors other than cost.
The experience of the organisation matters the most. Check if they work for our industry, if they work for the businesses same size as yours. Find a company with the most experience you need.
A PEO should dedicate its time for your services. The more services require more time for your business. Do not go for the organisation which is already occupied with tasks.
Ask a PEO for references of companies that currently use them or have used them in the past. If they are hesitant to provide references, they may not be a good fit. You should be discuss with and take their opinion.
A company which has a good track record and fiscal stability.
Company is certified by IRS and accredited by ESAC.
|PEOS DO||PEOS DO NOT|
|Handle HR services for employers, including payroll processing, HR compliance, risk management, employee benefits, employment tax and time management.||Take control of your business and make independent decisions.|
|Help reduce liability for payment of wages, payroll taxes, and state unemployment taxes||Supply labor or employee to businesses|
|Assist with employee recruitment and reduction of employee turnover||Make hiring and firing decisions for you|
|Make your business more attractive to current and potential employees||Manage wages and pay rates|
|Save you time so you can focus on the day to day operations and growth of your business||Help with marketing and sales distribution|
|Can manage cases and legal matters||Make labor or supply decisions|
Final Thoughts – Do you Need a PEO?
A PEO is the best solution to run an efficient and effective business. HR department of any business is important and plays a major role in running the business. If you have a large number of employees PEO is the best way to stay in compliance and help employees with everything they need such as hiring, benefits and other legal issues.