When managing your business, it can become all too easy to end up feeling overwhelmed. Often there are more questions than there are answers to difficult situations. As a business owner, your day to day deals with profits, marketing, accounting, hiring, terminating, benefits, HR–the list goes on. Undoubtedly, it is difficult to manage your own business, but if you could take some weight off your own shoulders you would, right? This begs the question, what is a PEO (professional employer organization)? And how can it help you?
In essence, a PEO serves as the employer of record for a client. PEOs, like StaffScapes, primarily serve small to mid-size businesses. In hiring a PEO, a business outsources a variety of human resources (HR) services. Accordingly, some of the company’s HR related administrative functions/tasks, such as compliance and mitigation, training and education, policies and procedures, HR services, payroll, workers compensation, and employee benefits become the concern of the PEO.
How Does a PEO Work?
A PEO is able to take on the functions and tasks mentioned previously largely due to co-employment. Simply put, this means that your business and the PEO share legal responsibility for the employees. When contracted, the PEO becomes your human resources department. They take on your payroll, workers compensation, and benefits administration. Likewise, they can provide management training, review internal policies, and ensure your business remains compliant with the myriad of laws and regulations most small business don’t have time to monitor.
The PEO can also handle many of your HR needs. However, it is important to keep in mind that the roles between the PEO and the client company will vary. Depending on the facts and circumstances of the relationship, each will have certain obligations of employment. It’s also worth noting that each state’s laws that govern PEO’s can vary widely, so check with your state on their regulations.
Why Should I Use a PEO?
According to a study done by Laurie Bassi and Dan McMurrer, businesses that use PEOs are 50 percent less likely to go out of business, grow 7 to 9 percent faster and have 10 to 14 percent lower employee turnover. Allowing a PEO to handle your administrative needs provides you and your small business a unique opportunity to more intently focus on profitability, productivity, and your core mission as a whole. With a PEO, you can keep the perks of a having a small business while giving access to your employees the benefits of a big-business like 401(k) plans, dental, health, etc.
Choosing a PEO
Choosing a PEO that’s the best fit for your needs is critical. After all, you want to do right by your business, your employees, and your customers. Here are some guidelines to help you choose a PEO that’s right for your company.
- Determine your risk management and human resource needs by evaluating your workplace.
- Meet one on one with the people who will be serving you and ensure the PEO is qualified to meet your goals.
- Check whether your selected PEO is a member of the national trade association of the PEO industry or NAPEO.
- Lastly, ask for client and professional references.
Working with a PEO is an important step in building your business, but choosing the right PEO is imperative. Contact StaffScapes a Denver, Colorado PEO to see if we are the right fit for your company.