A Professional Employer Organization (PEO) is an outsourced solution that businesses can use to help with payroll, human resources, benefits, and compliance. A professional employer organization can provide services that an employer can outsource, such as employee management tasks, including employee benefits, payrolls and workers compensation, recruiting, risk and safety management, and training and development.
What is a PEO?
A PEO company enters a co-employment contract with your business and assumes the employee-related human resource responsibilities, including payroll and benefits. By going into a co-employment with a PEO company, more time freed up to spend on running and growing your business. A PEO company will take on the administrative and human resources tasks for your business. The co-employment contract between your two parties distributes part of the employer’s responsibilities, including HR-related administration, and payroll, to the PEO company. When you share employer responsibilities with the PEO company, the PEO company takes on trust and shared liability with your business and generally oversees tasks such as handling payroll administration, HR support, tax filing, and access to the market.
How Does it Work?
The PEO company enters into a co-employment agreement with your business. A co-employment deal is a contract that allows for shared responsibility between yourself, the business owner, and the PEO company. By sharing responsibilities, your business can leverage help from the experts that the PEO company employs. In the co-employment agreement, the PEO company handles payroll administration, HR support, and tax filing. At the same time, you will be able to spend valuable time managing day to day operations of your business.
Your business can get help with PEO services by the unique co-employment relationship between the PEO and your business.
- Business Owner – as the employer, you maintain the day to day control of decisions and operations of your business. The business is always your business.
- Employees – through co-employment employees gain access to high-quality benefits at a better cost. Competitive benefits packages is an added benefit of working with a PEO company that isn’t always available for small and medium-sized businesses.
- Professional Employer Organization – The PEO company, through the co-employment agreement, becomes the employer of record for tax and benefits purposes. The role of the PEO company is to keep your business compliant with laws and regulations.
Below are five ways a PEO company can help your business succeed:
1. Improved Compliance
PEO companies have a team of human resource professionals who are up to date on compliance laws and regulations. There are many policies and procedures for onboarding, offboarding, and other tasks when it comes to employment. The purpose of the strict employment laws and regulations is to protect the employer and employee, and this happens as long as the business practices compliance. A PEO company can provide dedicated HR professionals who can help monitor business practices and help business owners keep up to date with policies and procedures.
2. Business Owner Focus on Business
When your business partners with a PEO company, you gain access to their wealth of services and knowledgeable professionals. A PEO company becomes the extension of your business’s office. The PEO company is available to help you with the administrative tasks of running a business and removes the burden of human resources, benefits administration, and payroll tasks from your plate. By the professional employer organization overseeing tedious HR tasks, more time is freed up for you, the business owner, to focus on growing your business.
3. High-Quality Benefits
Partnering with a professional employer gives business owners access to many benefits. The ability to offer employees benefits shows that you, the business owner, are invested in your employee’s health, well being, and future. The ability to provide comprehensive benefits packages to employees is a way to stand out as an employer for attracting top candidates and retaining employees. Benefits packages may include the following:
- Health insurance
- Dental insurance
- Vision insurance
- Life insurance
- Long-term disability insurance
- Short term disability insurance
- Employee assistance programs
- Employee wellness programs
- 401 (k) retirement savings plans
4. Health Insurance Programs
PEO companies help small business owners attain affordable health insurance programs. When you partner with a PEO company, and the professional employer organization becomes the employer on record, pooling your employees with other employers to form a more substantial buying power. The co-employment model allows PEO companies to approach health insurance as a more significant employer, meaning business owners are given discounted rates on health insurance packages, as opposed to being a small group.
5. Payroll Processing
A key benefit of using a PEO company is the ability to outsource payroll processing. The role of the PEO company is to correctly calculate gross to net payroll, file taxes, manage all other deductions, forward garnishments, and distribute checks or direct deposits. PEO company’s payroll processing services may also include assisting quarterly reports and processing W-2s at year-end.
So does a PEO company make a good fit for your business? Ask yourself these questions:
- Are you prepared for an HR emergency?
- Do you need a clone to help keep up with all of the HR administration tasks and running a business?
- Are you preparing employee paperwork and payroll properly?
- Are you competing with larger businesses with bigger budgets to attract top talents?
If your nodding yes to any of these questions, then a PEO company might be a good fit for your business.
The Conclusion
Professional employer organizations give small or medium-sized business access to one source for the majority of their business needs. Outsourcing to a PEO company can be a smooth transition with their easy bundling of business services for business owners to purchase. By using a professional employer organization, you do not have to concern yourself with the hassle of outsourcing to more than one outsourcing organization. With the partnership of a PEO company, small or medium-sized businesses can simply focus on the growth of their business, and rest easy knowing that a professional employer organization is overseeing the administration, HR, payroll, and benefits administration. The professional employer organization is invested in the success of your business and lends support and resources to help your business succeed in every step of the way.
