For small business owners in the know, PEOs have been a key component to their success. PEOs, or Professional Employer Organizations, are third-party companies that specialize in taking care of important aspects of running a business that most business owners would consider to be chores. Think of them as full-service HR departments for hire as well as price negotiators and a go-between advocate when it comes to securing healthcare benefits and insurance premiums.
Following are five key PEO services for small business:
- Payroll Administration
A 2014 study by PricewaterhouseCoopers showed small to mid-sized businesses spend $2,000 per employee per year to handle payroll administrative duties alone. That’s money that could be better spent elsewhere. PEOs take care of employee payroll and all the associated administrative tasks.
- Risk Mitigation
PEOs help business owners navigate the wacky world of bureaucratic red tape. They handle all the paperwork associated with tax credits, workers’ compensation, insurance, and a host of other tasks. That means business owners can get back to doing what they do best – running their business!
PEOs ensure compliance with all state and federal regulations, including ADA, EEO, HIPPA, OSHA, ADEA, Tax Compliance, FLSA, EPA, and numerous other mandatory rules and regulations. For most small business owners, hiring salaried HR professionals in order to comply with constantly evolving regulations is simply too cost prohibitive. PEOs provide the same expert services at affordable rates.
Because PEOs function much like an umbrella corporation, often encompassing many small clients, they are able to leverage economies of scale through a technique known as “pooling” in order to secure competitive benefits packages and reduced insurance rates. More often than not, the cost savings on benefits alone are enough to cover a PEO’s fees. Studies show that a majority of clients who employ PEOs are able to offer benefits to their employees, which can have positive ripple effects on employee retention and productivity.
Imagine if a third party did all the recruiting for you. They would find candidates, screen them, interview them, do background checks, and with your approval, take care of the onboarding and training process. That’s exactly what PEOs do for their clients.
In today’s hyper-competitive economy, small firms with an edge will ultimately win the day. PEOs can help sharpen your business’s edge.