Why Your Small Business Needs A Professional Employer Organization (PEO)

How Professional Employer Organizations are Changing the Market

In a business environment that is relying more heavily on human resource management and compliance departments to avoid administrative red tape, small businesses often get left behind as they do not have the resources or finances to compete with large conglomerates. 

These large companies are protected from liabilities and compliance issues by using these expensive departments and can thus focus on core economic growth. However, Professional Employer Organizations allow small businesses to offer Fortune 500 benefits and provide fully equipped Human Resources and Compliance departments not otherwise available to them. 

These benefits are extremely attractive to top job talent allowing them to work for smaller niche companies in which they can thrive. Furthermore, The PEO will stay up to date on all legislation pertaining to your business to help avoid crippling fines from administrative changes that may otherwise be impossible to follow. The PEO assumes full liability for any fines incurred while under the plan. 

Lastly, the PEO allows small businesses to qualify for up to 18 medical insurance plans with multiple companies and also provides supplemental plans not otherwise available to them including: Group Life, Dental, Vision, Long Term Disability, FSA’s, and 401k benefits. All of these culminate to help give small businesses the ability to compete with larger companies.

By taking on many of the distractions and challenges associated with the “business of employment”, PEOs enable their clients to focus their time and expertise solely on growing their business.

As companies become part of this larger pool, economies of scale allow them to lower employment costs, hiring overhead, and most importantly the monitoring of, and compliance with, employment laws. Failure to comply with these laws often entail heavy fines and are even used as a tactic to raise federal and state revenue.

Lastly, the PEO will handle redundant and routine tasks such as payroll, creating more time to grow the company’s bottom line and cutting out non-revenue generating functions.

HOW A PROFESSIONAL EMPLOYER ORGANIZATION WORKS

A PEO pools together small to medium sized companies to offer benefits and services of a Fortune 500 Company.

By using a PEO you are in a co-employment arrangement, in which the PEO provider takes on most of the liability for your company.

For example, the PEO is likely to pay out all workers compensation as well as assume responsibility for any compliance violations. Furthermore, your company will be provided with an HR representative and equipped with a fully-functional payroll system.

THE FOUR KEY ASPECTS OF A PEO

1. Fortune 500 Benefits

Have access to an increased variety of benefits such as life, health, and supplement plans all at a reduced price.

2. Human Resources

Gain access to a full HR department to take administrative burden off your hands.

3. Payroll

Save time by outsourcing payroll responsibilities so that you can focus on revenue producing business tasks.

4. Compliance

Avoid crippling fines from the state and federal government for compliance violations.