What Exactly is a Professional Employer Organization (PEO)?

A Professional Employer Organization allows businesses to outsource employee management responsibilities by providing human resources, compliance, risk management, and payroll services. Furthermore, your company and its employees are given Fortune 500 benefits such as Health, Dental, Vision, Life, and Disability. Your employees will also have access to retirement plans such as a 401(k). Another great source of potential savings comes from the workers compensation and EPLI insurance provided to your company at reduced rates. This may all seem too good to be true since joining a PEO will not only increase business productivity, but will likely cut costs. This is because a PEO pools together small to medium-sized businesses and is therefore able to offer greater benefits at a lower price point.

The PEO company is compensated through an administrative services fee for its Human Resources and Payroll management. However, the amount saved in lower employee benefit costs and by avoiding compliance fines generally saves companies thousands if not more. There are more than 700 PEOs in the United States and it is imperative that each company finds the right PEO that both saves them money and provides the right benefits that fit their company’s needs. This task can be imperative to the future success of a business but can be challenging, and has thus created a market for PEO experts.

5 Ways a PEO Improves Productivity

  1. Human Resource Outsourcing: By Outsourcing HR responsibilities and administrative tasks small business owners are able to focus on what they do best, running their business.
  2. Attract Top Talent: PEOs gives your company the types of benefits that are attractive to top talent, while still keeping the close-knit feel of your business making your company even more desirable to potential employees.
  3. Scale Your Business: If you are a small company planning to scale, a PEO can provide you with the infrastructure to allow you to focus on growth and will support your business even at the size of 200 employees.
  4. Eliminate Time Wasted on Payroll: By joining with a PEO, a company no longer has to waste time on payroll as it will be serviced through the PEOs payroll department.
  5. Compliance Regulation: Shift compliance liability to your PEOto avoid the crippling fines that are imposed on thousands of small businesses each year.

The Perfect Solution for Businesses Dropped from the Large Group Market

As of January 1st 2016, under the Patient Protection and Affordable Care Act (Obamacare), the definition of a small group changed to include between 1-100 employees. This means that companies of 51-100 employees that used to enjoy the benefits of the large group market, were dropped to small group community rated plans. This has increased premiums for many companies who not only pay more, but have fewer plan options.

Professional Employer Organizations are the solution to this problem. By joining with a PEO a company can get back into the large group market and is usually provided with greater benefit options than they had in the pre-ACA era. Ultimately, by using a PEO a company gains access to a variety of resources, and increases productivity leading to a greater bottom line.

A & C Management Group is here to help your company navigate through the complexities of choosing a PEO.

Contact us today and we will work with you to best meet the needs of your company.

Adam Nessim
Senior Director of Business Development
A&C Management Group, LTD

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