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The goal of any business is to run a profitable operation. But it order to be profitable, there are a lot of administrative tasks that need to be done properly, and many small businesses don’t have the structure to handle those administrative tasks. That’s why many small businesses team up with a Professional Employer Organization (PEO) to take care of all of their human resource needs such as payroll processing, distributing employee benefits, and handling worker’s compensation claims so that they’re free to focus on other things. But not all PEOs are created equally. Small business owners need to ask themselves a few questions when determining which is the right PEO for their business.

Why work with a PEO?

First, business owners need to think about why they should want to partner with a PEO. The primary advantage of partnering with a PEO is that they have the experience and HR knowledge necessary to effectively handle that business’s HR needs. Because federal laws and regulations are always changing, the HR departments of smaller companies often can’t keep up and get penalized for not complying with all of the laws and regulations. A PEO can help small businesses avoid these penalties.

What factors to consider

Different PEOs offer different services. Some PEOs package their services together while others let businesses choose what functions they want to hand over to the PEO and what functions they want to take care of in-house. When selecting a PEO to team up with, business owners need to consider which administrative tasks they need to out-source, and then compare the costs for different PEOs that offer those services.

How to determine which PEO is right?

Partnering with a PEO is a major decision, it shouldn’t be reached over lunch. Get to know any prospective PEOs over several meetings. Consider that PEO’s level of service. If an issue comes up, will you get in touch with a person or an automated service line when you call? Get references from other business owners who’ve worked with PEOs in the past.

Over time, the relationship with the PEO may no longer be profitable. Businesses should occasionally reconsider their partnership with the PEO. Business owners might realize that they are paying more for bundled services when they could be paying less for unbundled services and they may need to switch to a PEO that better fits their needs.

Source: Smart Business

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