Is A PEO the Right Model for My Company?
A PEO operates as a co-employer of your business and can take a lot off your company’s plate. They handle payroll, benefits packages, on-boarding, off-boarding, 401K, employee handbooks, workers’ comp, and compliance across the board with federal and state regulations. But this service does come at a cost, so it’s important to understand how a PEO works. Here are a few considerations if you’re thinking about going with a PEO to handle HR needs.
Number of Employees
If you run a small business (say under 15 employees), most likely outsourcing certain HR services is a better fit for you than a full-service PEO, although it is smart to talk to a company who offers both PEO and HRO models and let them help you make this very important decision. Many consider 20-75 employees to be the PEO sweet spot, as they free up employers to focus on the business side of the business. Large businesses certainly use PEOs, but one thing to keep in mind is that a PEO’s fee is a per-employee cost.
PEO’s have thousands of employees, so they can generally secure better, more cost-efficient benefits packages usually reserved for larger companies. The ACA has complicated this a bit, giving more affordable healthcare options to employees in small businesses. On the other hand, a PEO can help you navigate the complexities of new ACA stipulations, saving you a major headache.
Employers who enlist the services of a PEO (and their employees) can typically:
- Qualify for special discounts on their personal insurance (like home insurance).
- Save on group healthcare and benefits
- Be included in other benefits, such as a telehealth service
In some instances, a very small business can benefit from PEO services. If you have less than 10 employees, but you’re a startup, a PEO can go a long way in helping you get your business going, creating employee handbooks, training, establishing office policies and much more. You can focus on building your company while the PEO handles the difficult details of onboarding employees and making your business compliant with state and federal regulations.
Similarly, if you’re doing business (or starting a company) in a state you’ve never conducted business in before, going with a PEO is a solid choice, as they can iron out all the complex tax issues that entail.
If you own or operate a business, especially one that’s growing, you can definitely attest to the ever-evolving complexity of managing employees. With the daily human resources tasks involving payroll, healthcare, training, and benefits (just to name a few), it can take a lot of time and attention to make sure you are attending to the needs of your team.
That’s where a Professional Employer Organization (PEO) like LBMC Employment Partners enters the picture. A PEO is a co-employment relationship; meaning LBMC Employment Partners optimizes a wide array of human resources services to best serve you and your business.
What are the Benefits of a PEO?
The major benefit of being part of a PEO means that no matter the company size, your employees will be part of a larger pool, giving you lower benefits costs and a lower cost per employee for all human resources services. From benefits, payroll, risk management, and many other aspects of employee administration, you’ll have experienced HR professionals working on your behalf.
If you want to obtain and retain the best and brightest candidates, it’s important to have solid HR practices in place. LBMC Employment Partners can manage these daily HR tasks through multiple PEO services, including compliance management, wage garnishments, payroll processing, healthcare, and retirement. A PEO can reduce liability and offer access to certified HR professionals. A PEO also gives small businesses the ability to offer competitive 401(k) and insurance plans that are typically expected at larger companies, which can give you an advantage in recruiting top talent.
What Industries are Using PEO Services?
The ease and efficiency of using PEO services continue to gain appeal for businesses of various industries and sizes. Though the use of PEO services is more common among startup companies and small to medium businesses, larger companies are also finding many benefits to using PEO services when it streamlines insurance, payroll and retirement benefits administration.
Among the types of industries that have found value in PEO services are healthcare, technology, construction, and finance. The popularity of PEO companies continues to show growth each year, and with the passage of the Small Business Efficiency Act (SBEA) in 2014, the industry is well-positioned to grow even more in the days ahead.
The management of employees becomes more and more complex each day. Even if you have a dedicated HR employee or staff, you can alleviate the complexities of employee management by outsourcing your non-core business functions to a PEO, while you and your team focused on revenue-producing operations.
Want to learn more about the popularity of PEO industry? Wondering if a PEO is a right model for your company? We’d love to answer your questions and discuss how we can customize a plan that best fits your business. Contact us today!
All content and services on this page are offered by LBMC Employment Partners, LLC. LBMC Employment Partners, LLC, is part of the LBMC Family of Companies and is an independent entity with services and products being provided exclusively by LBMC Employment Partners, LLC.