If preparing payrolls and handling employee benefits is burning you out, it’s time to ask for help. A professional employer organization (PEO) will be your best shot if you want someone to handle your cumbersome HR duties.
Statistics show that a PEO can help your small business grow 7% faster. Also, it will reduce employee turnover in your business by 10% to 14%. These numbers show you why partnering with PEOs should be your priority.
But what is a PEO? Read on to learn what a PEO does and so much more about partnering with a PEO.
What Is a PEO?
A PEO is a company that provides businesses with human resource expertise and services that employers may be unable to provide on their own. A PEO will allow you to outsource most of the time-consuming HR functions. It will also share your employee liability while allowing you to improve your employee benefits package.
What a PEO Does
A PEO offers a wide range of services to help you focus on what matters most in growing your small business. It will handle the following functions for your small business:
- Payroll management
- Developing employee training programs
- Benefits administration
- Tax administration
- Employee recruitment
- Employee safety programs
- Retirement plans
- HR management
- Human resources policies and practices
- International partnerships
- Workers’ compensation claims
What a PEO Doesn’t Do
Understanding what a PEO doesn’t do will ensure that you don’t believe some of the most common misconceptions about PEOs. It will give you more confidence when outsourcing some HR functions that can burn you out.
A PEO will not do the following to your small business:
Take Control of Your Business
If you’ve talked to others about partnering with a PEO, they’ve probably warned you about losing control of your business. This is just a misconception.
A PEO will focus entirely on assisting and advising you on HR issues while you retain control of your business. The organization will not take a controlling stake in your company. So, there is no way you’ll be relinquishing control of the business you have worked so hard to grow.
Hire and Fire Your Employees
One myth you’ll encounter is that a PEO will make hiring and firing decisions for your business. The truth is, you’ll retain the decision to hire and fire your employees as you deem fit.
The only thing a PEO will do is help you when hiring new staff. A PEO will help you develop job descriptions, review the applications sent by potential recruits, and train your new hires.
Affect Your Existing Staff
Don’t listen to those telling you that a PEO will impact the functioning of your current employee. If anything, a PEO will be a valuable resource for your employees and may sharpen their skills. For example, a professional employer organization can organize training for your employees and offer specialist advice when necessary.
How a PEO Works
A PEO follows the co-employment idea, which involves contractual sharing and the allocation of responsibilities. This means that when you partner with a PEO, you’ll split employer responsibilities between yourself and the PEO.
In most cases, the shared responsibilities will be centered on employer compliance. For example, the PEO will give you information about federal and state compliance issues that can impact your small business. The professional employer organization will also guide you on meeting the compliance requirements.
However, it will be up to you to take the actions necessary to meet the compliance requirements in some instances. Besides responsibilities, you’ll also be sharing the risks with a PEO. So essentially, a PEO will strive to give you appropriate guidance to mitigate your risk as a business owner and its own risk as the co-employer.
When partnering with a PEO, you’ll still be in charge of all the day-to-day functioning of your business.
The Benefits of PEOs
You could gain so much from letting a team of experts take away the burden of managing various human resource activities. Here are some of the significant benefits of partnering with PEOs.
More Time to Focus on Growing Your Business
When you work with PEOs, you’ll be letting a team of experienced HR professionals deal with the cumbersome human resource activities. For example, a PEO will handle complex payroll activities.
This means that you and your employees will have time to focus on activities that align with your mission. You’ll focus on essential activities like marketing your products and connecting with your customers and prospects.
Staying on Top of Compliance Issues
As a small business owner, you may be unfamiliar with the state, local, and federal HR compliance regulations. A PEO has the expertise to advise you on these compliance areas. The organization will provide you with specialized PEO services to help you navigate tricky regulatory issues.
For example, a PEO like Bradford Jacobs PEO services will help you bypass the complex employment laws in the United States. Even if you’re looking to expand your business globally, the PEO will help you with payrolls, taxes, and other compliance issues. Such PEOs will help you avoid costly penalties that may arise if you misunderstand employment regulations.
Access to Better Employee Benefits
A PEO will group your employees with its other co-employees to form one big group. PEOs will use their buying power to negotiate better insurance and more affordable benefits for your employees. This way, the PEO will help your employees access health benefits at rates similar to those of huge corporations, even when they work for your small business.
For example, your employees may access better health insurance and other Fortune 500 benefits. As a result, they’ll level the playing ground for you when competing for talented employees against large corporations. It’ll also be easier for you to retain employees.
What Is a PEO? Find Out and Start Leveraging Its Services
If you intend to partner with a PEO, your first question will probably be, what is a PEO? We’ve given you the answer to this question to help you understand what you’ll be getting into.
The bottom line is that a PEO will handle all the time-consuming and complex HR activities for you. You’ll have more time on your hands to focus on what matters most in growing your business.
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