A professional employer organization (PEO) can help protect your business in many ways. A professional employer organization can take care of your human resource requirements through a co-employment agreement. PEO services support a small or medium-sized company that needs help with their employee-related tasks.
A PEO company is a third-party agency that can help businesses with managing payroll, taxes, benefits administration, regulatory compliance, and human resource services. Through the co-employment agreement, the PEO company stays operational in the background but can influence the culture of the business. Professional employer organizations are best suited for small or medium-sized companies that have a lot of growth in their future.
Why Should a Small Business Work with a PEO Company?
There are numerous reasons why a growing business should decide to use a PEO company to help reach their goals. The number one reason being that small to midsized companies have limited access to HR and accounting specialists, which usually falls to the manager or business owner. Through a professional employer organization, your business receives access to skilled professionals in the areas you need at less money than hiring employees to perform these duties.
Professional employer organizations give small to midsized businesses access to the resources of big companies, for example, lower costs for your employee benefits. A PEO company can offer a range of employee benefits at a reasonable group rate, including dental and vision plans, retirement savings plans, and supplemental insurances.
A PEO company has sources of information and connections in anything related to accounting and HR. These resources give businesses a safety net of experts to call when making decisions and needing help in these specific areas. As companies grow, professional employer organizations can adjust to continue to provide support along the way.
Services the PEO Companies Offer
The majority of professional employer organizations offer payroll and benefits support. However, there are a more significant number of services available from PEO companies, including recruitment and employee leasing, new hire onboarding and screening, safety training, workers compensation claims processions, risk compliance and audits, and more depending on the PEO. Find the right PEO services, first by analyzing the services your business needs.
Below are four ways PEO companies help protect your business:
1. PEOs handle taxes and payroll
A small or medium-sized business owner is not going to know the ins and outs of tax laws. That’s why when you partner with a professional employer organization, they will handle your yearly reports. Still, they also handle payroll services and deduct the correct amount of taxes for each employee’s wages for each period of pay. You will be assigned a PEO account manager, and this manager will know state and federal tax laws, ensuring that your business is avoiding finds and acting out of compliance.
2. PEOs manage workers compensation and unemployment
Registered businesses need to pay compensation and unemployment costs, and need to have workers compensation insurance. The specifics on workers’ compensation and unemployment costs will be different depending on the business type, state locates in, and can get very complicated. If your business isn’t paying or is paying incorrectly, you can find yourself penalized. By partnering with a PEO company, they are responsible for knowing the state’s compensation laws and verifying that your business pays the proper insurance amount.
3. PEOs know how to track employee performances
Professional employer organizations can help small or medium-sized businesses with managerial duties, such as employee performances. It can be challenging to give employees job feedback and perform how they do their job. A PEO company provides employee performance tracking software that comes with forms for both you and your employers. A professional employer organization provides a performance reporting structure for you to use to help with employee reviews so that you and your employees are on the same page of goals and areas of improvement.
4. PEOs Save time and money
A PEO company can save you time and money. Using a PEO company is a way to outsource your tasks to experts and free up time for you to focus on growing your business. When you partner with a professional employer organization, experts in human resources best practices, health insurance, and retirement savings plans will manage these tasks for your small or midsized business.
How to Choose the Right PEO Company?
Deciding to work with a PEO company should be taken seriously. There are several items to look into when you are considering partnering with a PEO company:
- Determine your workplace human resource needs and if the professional employer organization can meet these needs.
- Ask the professional employer organization for a list of their past clients and for professional references to gain more knowledge about the PEO company.
- How skilled are the professional employer organization’s internal staff? You want to be dealing with a PEO company with a team with high levels of expertise and competence, along with access to ongoing professional development.
- How are employee benefits funded? Is the professional employer organization fully insurance or self-funded? Is the insurance carrier licensed to do business in the state your company operates from?
- Do benefits that are offered by the professional employer organization make the best sense for your employees, or are they not enough?
- Review contracts and service agreements very carefully, examining each party’s responsibilities, fees, renewal, and cancellation terms. Pay close attention to cancellation terms.
- Confirm with the state that the professional employer organization works to ensure that the PEO company is authorized to do business there.
- Review any negative feedback carefully that you see about the professional employer organization and ask the PEO company questions in advance before signing any agreements.
The Conclusion
Professional employer organizations exist to offer HR solutions and administrative services to your small or medium-sized business. The PEO company protects your business from liability issues, and eases stress and worry from dealing with regulations, payroll errors, and performance reviews. With a professional employer organization handling your human resources and accounting, you can focus your time and energy on building a successful business and creating a better workplace for employees.