How PEOs are Changing the Way Businesses Operate
PEO stands for “professional employer organization”. These organizations serve a variety of functions, from payroll and benefits management to other HR services. Outsourcing such services has changed the way many businesses operate, saving time, money, and the hassle of maintaining things like tax compliance. PEOs are definitely here to stay, with some of the top names in the industry serving thousands of businesses in all 50 states. Here’s how PEOs are changing the way businesses operate.
What’s a PEO?
A professional employer organization is an entity that partners with a business to provide a co-employer relationship with that business. That is to say, once you partner with a PEO, your employees become the shared responsibility of the PEO. With employees from several organizations pooled under a single entity, your PEO can generally provide your employees with access to better rates on benefits like healthcare.
What Services Do PEOs Provide?
Depending on the PEO, you could potentially have access to dozens of services, but the basic functions of PEOs are relatively the same. Some standard services in the industry include:
- Benefits and payroll management
- Tax Compliance
- Risk management
- Document management
- Onboarding services
With all of these services (and then some) being handled by a third party entity, you can eliminate the stress and cost associated with managing them yourself (or hiring a full-time HR staff to do so).
PEO services are available in all 50 states. For example, business owners in Texas can find a Texas PEO company for your business on Careful Cents.
How is This Beneficial?
Besides eliminating the cost of a full-time HR staff, there are several other advantages to entrusting your HR and payroll needs to a PEO. Convenience is probably the most obvious advantage, as managing HR and payroll needs on top of running a business can be exhausting.
On top of convenience, you can eliminate the worry of remaining within compliance with the IRS. Unfortunately, taxation and things like deductions can be complex and difficult to navigate, which is why it’s best to entrust these items to an expert.
A PEO will have tax experts on staff to assist you with any questions or concerns you have related to taxation. Your employees can also contact the PEO in regards to their pay stubs or any other tax-related questions, so you don’t have to endure the awkward “I don’t know the answer to that question” part of tax inquiries.
PEOs have experts in many areas, from risk management to help you better identify and manage the risk associated with your business, to onboarding experts that will make the hiring process not only simpler but much quicker.
A quicker hiring process, better benefits package and payroll management means that you’re setting yourself apart from your competition and attracting more qualified candidates to work for your business. Problems with payroll can become extremely frustrating for new and seasoned employees alike, causing them to seek other employment options (usually with competing companies).
Keep your employees happy, your business in compliance, and all aspects of your HR department running efficiently by trying out one of these great PEO companies for 2019.
Business Is Now More Efficient
An efficient business is a profitable one. PEOs help increase your business’s efficiency, and therefore boost growth and reduce employee turnover rates. Employees will feel more confident in their compensation, as well as their benefits management when you’re partnered with a PEO.
Happy employees can mean greater participation and production numbers. It’s infinitely easier to inspire and motivate employees who are happy with their compensation than ones who are not.
With more to offer potential employees, you’ll be able to attract well-qualified candidates to your positions. Better employees are invaluable to a growing business, as one of the biggest struggles small businesses face is finding the right help.
Is it Right For Me?
Whether or not your business needs the services of a certified PEO is completely dependent on your business situation. Some PEOs only offer their services to businesses with a certain number of employees, so be sure to check the PEOs service threshold before proceeding.
PEOs will also incur a certain cost for your business, usually based on a per-employee rate, yearly rate, or even a percent of payroll managed rate. The payment structure varies among differing agencies, so do your research and be sure you understand the structure of the PEO you choose before signing a contract.
If you’re constantly getting fined by the IRS for non-compliance or payroll errors, then a PEO may be just what you need to stay out of hot water. IRS fees can add up over time, especially with recurring errors. You don’t want to spend thousands on fees when you can simply outsource your payroll and keep everything within compliance.
Do PEOs Help Run My Business?
A common misconception about PEOs is that they help run businesses. This technically isn’t true; rather, PEOs work to help manage your HR department and payroll services. The co-employer relationship doesn’t exactly mean that your PEO will help you make difficult growth decisions or provide any advice on how to increase sales and revenue.
The PEO business model has actually been around for many years but has only recently begun to gain some traction in the business world. Thousands of small to medium sized businesses all over the country now entrust their HR and payroll services to the care of a PEO, increasing their efficiency, reducing turnover, and attracting the right candidates with great benefits packages.