peo companies

clock January 22, 2021

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What Do PEO Companies Do?

Employees are the lifeblood of any organization; that’s why the average company spends around $4,129 on recruiting a single employee. It’s also why businesses strapped from cash are hesitant to hire new employees despite the urgency.  

Businesses, especially startups and small businesses, may not have concrete human resource setups to conduct comprehensive recruitment exercises and other HR operations. If this sounds like your company, it’s high time you hire a professional employer organization. That way, you can focus on more important matters while it handles the bulk of your HR activities. 

So, what do PEO companies do exactly? We’re glad you asked. Keep reading to learn more as we go into detail about what PEO companies are and what they do.

What Is a PEO Company?

A PEO company or a professional employment organization company is a human resource outsourcing solution that takes over most HR responsibilities. Some of these responsibilities include recruitment, payroll administration, compliance, workers’ compensation, and much more.

When you retain a PEO, the PEO automatically becomes the de facto employer of your business. This, however, doesn’t mean that the PEO will take over our business. It means the PEO will handle take overall employer and human resource tasks.

You’ll remain the operational employer and keep the company running as it should, minus the HR responsibilities. When you sign a contract with the PEO, you’ll agree on which HR tasks and even liabilities the PEO will take over.  The contract between you and the PEO is known as a client service agreement.

What Do PEO Companies Do?

As mentioned above, PEO companies offer several services that you can choose from. The PEO becomes your employees’ employer, even though your employees answer directly to you.  If you hire a PEO, you can have them offer you all their services or those best suited to your business needs.

PEO companies operate on a contractual basis, where you and the PEO agree on the terms of service. It’s worth noting that you can cancel the PEO contract as long as you give a 30-day prior notice. PEO services vary from one company to another. Here are some of the most common services that PEOs offer:

  • Human resources management
  • Recruitment and training
  • Government and tax compliance
  • COBRA management
  • Benefits administration
  • Employment taxes
  • Safety compliance (OSHA compliance)
  • Legal compliance
  • Payroll administration
  • Insurance management

These are just some of the many services that PEO companies offer. Remember, you can tailor your PEO service to feature only services specific to your business. You’ll outline all that when drafting the contract between you and the PEO.

When choosing a PEO company, make sure you choose one that offers most of the basic human resource services. These services may include recruitment and training, payroll administration, and tax compliance, among others. 

What Are the Pros of Hiring a PEO Company?

PEO companies have proved immensely beneficial for businesses of all sizes across the country. Here are a few benefits of hiring a reputable PEO company.

Takes Over Human Resource Management

As a business owner, you wear many hats, from handling business affairs to being the face of the company. One thing you don’t have to worry about when you hire a PEO company is human resource management. You can rest easy knowing the PEO company will assume all human resource roles so you can focus more on your business.

Better Benefits for Your Employees

A PEO company can offer better benefits and employee experience than your small or medium-sized company can on its own. Through a PEO, your employees can gain access to benefits that only large businesses can. This can help motivate employees and enhances employee retention.

Some benefits you can expect with PEO companies include:

  • Life insurance
  • Personal accident insurance
  • Short- and long-term disability insurance
  • Retirement plan
  • Commuter benefits

These are just a few examples of the many benefits PEO companies offer. These benefits vary from company to company. As such, make sure you settle on the right PEO to get the best benefits.

Helps Avert Risk

There a degree of risk companies must contend with when they hire employees. Whether it’s a pandemic, natural disaster, or pandemic, crises can send business owners into panic mode. It’s hard to make so many crucial decisions in a very short time. That’s why you need a PEO to reduce a considerable portion of risk by conducting:

  • Effective claim resolution and EEO reporting
  • Management of all employee claims
  • I-9 requirements

Reputable PEOs have teams that keep a close eye on ever-changing state and federal laws relating to employees. That way, you can sidestep hefty legal repercussions should the unexpected happen.  Plus, with the provision of insurance policies like worker’s compensation, you can protect your employees as well as your company.

Reduces Cost

Having an internal human resource setup can be too costly for startups and small businesses. Even large businesses experience financial challenges when it’s time to expand and explore new frontiers.  A PEO can help businesses reduce cost by doing the following:

  • Streamlining payroll and compliance processes for better efficiency 
  • Developing an efficient and feasible recruitment process for your company
  • Giving you access to cost-effective employee benefits that can save you a bundle in the long run
  • Avoiding fines and penalties that accompany lack of compliance with taxes and other regulations

If you crunch the number, you’ll find that hiring a PEO significantly reduces business costs. You can channel the money you save into other activities that grow your business.

Hire a PEO Company Today

PEO companies have thrown many businesses a lifeline. If you’ve been mulling about hiring a PEO, the best time to do so is now. That way, you can reap the many benefits of hiring a PEO sooner than later.

To get the best from your PEO, make sure you hire the right one for the job. The best PEO company is just a phone call away. Contact us today for unmatched PEO services to ease your HR burden.

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