What you need to know when considering a PEO
If you’ve read much about Professional Employer Organizations (PEOs), you’ve probably heard them described as everything from the best to the worst decision a business could make. So where does the truth lie? Are PEOs valuable tools for small businesses, or are they a bundle of services that you don’t really need? In most cases, the answer doesn’t lie with the PEO, but within your own organization. Understanding your own needs, both present and future, will allow you to determine whether a PEO may be a valuable solution for your company. Below, I will explain how PEOs work, then describe a process by which you can evaluate the value a PEO could bring to your organization.
What is a Professional Employer Organization?
A PEO is an organization that provides outsourced services such as employee benefits, payroll, workers’ compensation, state and federal compliance, recruiting and more. In the right situation, a PEO can allow small businesses to cost effectively outsource human resource and other issues that come with being an employer. How does a PEO work? PEOs establish an employer relationship with employees and thus take on much of the responsibility of the employer. Working with a PEO creates a co-employment situation which assigns specific employer responsibilities to the PEO. In an ideal scenario, using a PEO can allow a business to offer more to their employees than they could on their own, while removing the large administrative burden of being an employer. Businesses that use PEOs may believe that the cost associated with the PEO relationship is more than offset by the benefits, including the ability to focus on the core activities of the business... Read More
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