What Is a PEO and What Does It Do For Smaller Employers?

Feb 20, 2020Blog0 comments

The total American workforce comprised of more than 157 million workers in the year 2018. Small and medium-sized companies employ a sizable majority of this labor force. 

Being able to manage such diverse human capital demands for massive levels of internal capacity. Nonetheless, this is one thing that most small and medium-sized companies lack.

Professional Employer Organizations exist to bridge this gap in human resource management. Your business can gain substantially from collaboration with Professional Employer Organizations. 

Have you been wondering what is a PEO? Well, this article provides you with all the answers to the questions you might have about PEOs. 

What Is a PEO?

PEOs are entities that partner with small businesses to offer all sorts of human resource support services to clients. For most PEOs, the modus operandi leans more towards co-employment. As your business grows by leaps and bounds, you are likely to face numerous new challenges related to the pressure to manage the human capital. 

PEOs exist to ensure that you don’t get bogged up with all the pressures of managing your employees. 

A Professional Employer Organization is, therefore, an outsourced solution in support of your HR processes.

The main advantage of sourcing for POE services is to ensure that your company proceeds with its core business. You can then leave the POE to handle the critical back-office stuff.   

Can You Substitute PEO for HR Software?

This is among the most commonly asked questions about the application of PEO. But the answer is that you can’t compare the benefits of PEO with those of human resource software. For most HR software packages, you can only enjoy programmed applications, which have limitations.

Such software is unable to move in tandem with the changing scope and practices in human resource management. But with PEOs, your organization adopts a co-employment model. This means that your firm’s HR processes and all the liabilities associated with it become co-shared.  

What Does PEO for Small Businesses Do?

Once you outsource the services of a Professional Employer Organization, you no longer have to worry about specific human-resource-related responsibilities. The relief is necessary because it allows you extra time to focus on enhancing productivity in your business. 

1. Payroll Administration 

One of the significant human resource roles that may often overwhelm you as your business expands relates to payroll management. You may end up dealing with automated deposits or one-off payments under immense pressure. Such activities become more complicated as the organization grows.

Imagine the amount of time you must spend preparing salaries for both part-time and full-time employees. If your human resource capacity is constrained, the process of payroll preparation may cost your business more time and money.

Have you been overwhelmed by the need to maintain a payroll system for your organization? Don’t flinch. You only need to source for the services of a PEO.  

Your preferred PEO will take care of your payroll administration needs. Such exclusive HR support allows you the chance to focus on other more essential functions.  

Our POE payroll administration services include the critical role of overseeing single and multi-state payroll systems. You’ll also benefit from other services such as online processing and W-2 preparation and distribution. Our professionals also take care of your employer’s tax deposits and filling without you lifting a finger.

2. Employee Benefits 

As a responsible organization, you must be keen to protect the interests of your employees at all times. It would help if you also had competitive benefits to attract top talent. You can offer a wide range of benefits to your employees through a partnership with a reputable PEO.

Such benefits include employee assistance plans and the various 401 (k) options. Associating with a Professional Employer Organization also ensures that you can manage other benefits such as health savings and spending programs that favor your employees. 

If your small business is able to harness such benefits through POEs, you can have the guarantee of attracting top talent. You may also utilize the ability by POEs to offer employee training and development. This would be important in keeping your employees abreast of various changes in the industry.    

With our unique benefit plan administration, your employees no longer have to worry about getting a good healthcare medical plan. Your employees will also be able to benefit from well-informed advice on the best insurance options depending on the needs. 

3. Compliance Support 

Ensuring that you operate in total compliance with the set regulations is critical. But often, due to busy schedules and deadlines, you may be unable to keep up with the compliance needs in your area of operations. With a POE, such concerns are non-existent.

Professional Employer Organizations ensure that your company remains fully compliant with the laws. You can also trust your POE of choice to handle other issues such as workers’ compensation and the 1099 fillings for your business. Compliance support ensures that you operate your company without having to keep looking over your shoulder.   

4. PEO Health Insurance 

Your employees’ health comes first always. But often, it’s hard for small businesses to manage the healthcare needs of such workers. While POEs don’t offer insurance services, they can help you match your employees’ health care needs with a favorable provider.

Your PEO only needs to consider health care needs then assess the company’s budget. Such information guides the health care insurance options the company offers to its workers. You can rely on the experience and exposure of these POEs to ensure that your employees get the best match for their health needs.

What You Should Know About PEO

With a POE arrangement, the Professional Employer Organization assumes the lion’s share of liability for every transaction. However, you, as the client company still retain the responsibility for product promotion, development, and marketing. The only shared responsibility between you and the PEO is on instances of law compliance.

You Don’t Have To Be Overwhelmed With HR Roles When You Can Outsource

In the past, human resources departments were a beehive of activities as employees tried to meet deadlines in their social capital management process. But now that you understand what is a PEO, you no longer have to worry about managing your multiple HR-related roles. This approach will bear fruits at the end, where you can focus on the core business as the PEO takes care of all other routine HR activities. 

Are you looking for specialists in compensation insurance and other PEO related roles? Please contact us, and you won’t regret it. 

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