A PEO company is a partnership where you can get better benefits for your employees, save money, and take HR and compliance issues off your plate. PEO stands for a professional employer organization. A PEO company, through a partnership, will act as your employees’ employer for the records and legal purposes. Still, it lets you access the PEO’s resources, such as benefits, insurance, workers’ compensation, and HR resources. Through a partnership with the PEO, your business receives the benefit of having its own in-house HR team.
The significant advantages of using a PEO company include:
- Offering employees comprehensive and cost-effective benefits
- Reducing the cost of providing benefits from insurance providers
- Getting complete HR services and saving money from having to hire staff
- Reducing the risk of mistakes and ensuring HR is in compliance
How Does a PEO Company Work?
PEO companies use a legal arrangement called a co-employment. Through the co-employment agreement, the PEO will act as the employer of your employees for special situations. Still, you, the business owner, retain control of your company, employees, and the hiring and firing decisions. When dealing with benefits and HR, the PEO’s specialist will work for you.
The co-employment agreement is more powerful than simply outsourcing human resources. When you outsource your human resources, your HR team is a contractor working for your business. As a contractor, they cannot bring your employees under their own benefits network and have no legal authority to dispute any HR claims.
A PEO company is very different since they act as an employer. A PEO company can offer employees benefits, retirement plans, and additional perks. Along with offering employees competitive benefits packages, the PEO company can provide legal advice for any employee claims.
How Does Co-employment Work?
In a co-employment agreement, both parties have defined roles.
- Business Owner’s Role – As the business owner, you are the primary employer, and have authority over the PEO company. You keep control over your employees’ workdays, job descriptions, and manage the organization’s structure.
- PEO’s Role – The PEO takes on specific obligations as the employer, which the business owner can choose. You, the business owner, give the PEO the control to handle administrative taxes, such as payroll, tax withholding, and providing benefits for workers.
The co-employment agreement gives your business a full-service human resource agreement, where you can share liability, receive discounts on benefits, and access better benefits packages to help in attracting new hires and retaining employees.
Who Uses a PEO Company?
Any business can use a PEO company. Sometimes clients of PEO companies include:
- Small businesses with 5 to 10 employees
- Growing businesses with 100-200 employees or more
- Or larger companies looking to expand
Any industry can access help through a PEO company including technology, finance, real estate, health services, property management, manufacturing, law firms, accounting and auditing, plumbing, HVAC, and many more.
What Are the Benefits of a PEO Company?
A PEO company offers an all-in-one HR solution. Most PEO companies can provide all your HR needs, including:
- Employee Benefits – A PEO company can access various benefit plans at better rates than a small or medium-sized business would be able to get on their own. These benefit plans include comprehensive benefits, like medical, vision, retirement savings, dental, and more.
- Payroll – A PEO company handles the aspects of your employees’ payroll from tracking and documentation to taxes, deductions, garnishments, and sick and vacation days. Through the professional payroll services your employees receive direct deposit, access to online pay stubs, and record-keeping.
- HR Administration – A PEO company provides employees onboarding manuals, employment verification, termination support, and new hire onboarding. A professional employer organization works with your business to help streamline your HR administration.
- Workers’ Compensation – A PEO company provides your business with workers’ compensation insurance and management of any claim from start to finish. A PEO company can help carry out preventative safety reviews, resolve injury claims, design safety programs, and help injured workers with returning to work.
- Recruiting – A PEO company can make the hiring process easier for your business. The professional employer organization works closely with you to develop more substantial job descriptions and train your managers in charge of hiring to identify the best talent for positions. A PEO company can help with adjusting your salary offers.
- Training and Development – Professional employer organizations can offer training for staff, and professional development for leaders with online learning systems, digital or on-site training, and custom seminars.
- Performance Management – A PEO service can help with rewarding your best-performing employees by assisting with employee evaluations, salary resources and tools, supervisor coaching, and tools to help develop professional development.
- Strategic HR Planning – A PEO company can help with developing an HR plan that helps your business with attracting and retaining the right people. A professional employer organization helps conduct strategic planning that streamlines your human resource policies to match the growth of your company.
Final Thoughts
Choosing a PEO company can be a process, and you want to make sure that you are selecting the right PEO services for you. You want to make sure that the professional employer organization can help you with human resources, payroll and benefits, which can help with building a happier workspace and employees. Gaining these services means you need to partner with the right PEO company by researching their services and meeting with their specialists.
A PEO company can help with reducing your liability when it comes to taxes, paperwork requirements, insurance, and equal opportunity employer claims. You can feel at peace, knowing that your business is compliant with all state and federal laws when it comes to employment regulations.
A PEO company can be a great addition to your business, and it allows you to outsource time-consuming and tedious tasks to specialists so that you can focus your time on your business and growth. It is essential to focus on the needs of your business when selecting a PEO company and to make a comparison of different professional employer organizations that you are considering. Ensure that the PEO company you decide to work with provides risk management, payroll, human resources, and any other necessary services you need for your business.
