For many small businesses, a PEO offers them high-level benefits at a reasonable cost, and it allows them to outsource all HR tasks to a common partner. That way, all tasks, paperwork, and administration are housed under a single roof. There are several advantages to a PEO that makes it a solid fit for small business owners.
1. Give Employees Access to Excellent Health Insurance
The bargaining power of a PEO is the main reason many small businesses select a PEO to meet their HR needs. As healthcare laws become more complex, it’s essential to partner with a company that can give your employees access to affordable, high-coverage healthcare and keep you in compliance with changing regulations. However, as a small business, you often can’t attract feasible offers from insurers. A PEO places your business in a pool with thousands of other employees, making it an attractive client for many insurance companies. Competing bids will lead to reasonable offers, and you and your employees will benefit.
2. Negotiate for a Strong Retirement Package
A solid benefits package can be the difference between retaining talent and losing it to a larger organization. As employees build families and careers, they take a greater interest in the money they are saving for retirement. As a small business owner, the 401(k) plans you have access to may not be as competitive as plans offered at a larger corporation. With a PEO, that doesn’t have to be the case. As part of a larger group, you can offer employees impressive retirement plans that allow them to proactively plan for the future.
3. Protect Your Company Against Liability Claims
Partnering with a PEO can give your small business access to liability insurance. Although many startups don’t consider the need for liability insurance, it can save employers thousands of dollars in legal fees. When a business is just starting out, that type of loss can have a huge impact on a company’s viability. A PEO can take the lead on managing the claim process and can provide expertise and guidance through a difficult and complicated employment situation.
4. Help Your Businesses Establish HR Documents and Policies
It can be overwhelming to consider all the policies, protocols, and paperwork necessary to make sure your HR needs are completely covered. A PEO can help set up all the legal, governmental, and liability paperwork to make sure you and your employees are properly protected. This is particularly important, considering the frequent changes that occur in state and federal regulations. New businesses also need an employee handbook, answers to frequently asked questions about the benefits package, and procedures in place for any HR issues that may arise. Having a trusted professional handle all these things can take the pressure off an already-stressed business owner.
5. Attract and Retain Qualified Candidates
Capable and conscientious employees are efficient, effective, and bring creativity and innovation to a company. Unfortunately, these talented individuals can be difficult to keep on a small business payroll, due to their desire to advance their careers. Impressive benefits packages can also draw talent away from a smaller organization. With a PEO, you can retain valued employees by giving them access to excellent benefits. This can prevent talent from being poached by bigger corporations after a few months or years. You can keep expertise and innovation in your office and keep low turnover numbers.
6. Ensure Compliance with All Federal and State Regulations
Workplace policy is a constantly changing world of new legislation, governmental compliance, repealed bills, tax credits, and new initiatives. Making sure you’re in compliance with FUTA, SUTA, FICA, and myriad state and local requirements can take time, energy, and expertise. Most importantly, it can take your attention away from more important company-wide and overarching goals. This is where a PEO comes into play. Your HR provider should stay abreast of all relevant regulations that apply to your business. From reams of paperwork to submitting everything in a timely manner, a strong HR partner can help you meet every deadline with confidence.
7. Organize Payroll Tax Documents and Prepare for Audits
It’s hard to keep track of the countless forms small businesses must prepare and submit to the government. Preparing payroll taxes is especially complex for smaller organizations. In addition to applying for state, local, and federal tax credits, small businesses must be prepared for an IRS audit, should one occur. Using a PEO can help keep all these forms correctly completed and organized, making it a breeze for an accountant to pull the relevant information when taxes are being prepared. Many small business owners feel trepidation and confusion about the complex payroll tax laws surrounding corporations. A PEO will help you feel confident that you’re prepared for anything.
8. Serve as a Liaison for Employees
Employees don’t always want to discuss medical issues, retirement savings, or other HR topics with a direct supervisor or someone in a C-level position. Instead, a PEO provides a safe and comfortable buffer between employers and employees around employees’ personal information. That confidentiality is highly valuable to your employees. It can be deeply reassuring to know there is an accessible expert who can provide them with pertinent advice and guidance. Employees can feel free to ask all the questions they want, not worrying that they are taking up the time and energy of their direct supervisor. Instead, they can go deep into the weeds of their benefits package with people who know it best.
9. Provide Ongoing Counsel for Business Owners
As your business grows, your HR needs can change. When you partner with a PEO provider, you’ll receive guidance and help as you navigate new waters. If you’ve worked with a PEO from the very first day of your business, your HR company will have the knowledge and perspective of your company’s history to suggest options going forward. Since they also partner with many other small businesses, they have a wealth of data and experience to draw from while advising their clients.
10. Collect and Analyze HR Data
A solid PEO provider will collect and share your HR data year-to-year so you can focus on being strategic with your employee-related payroll and benefits information. That way, you don’t have to rely on anecdotal data to make crucial business decisions. Instead, you can analyze your company’s trends so you can assess how your benefits package is functioning. You can also look at employee retention, bonuses, salary, and incentives. This will allow you to make larger systemic changes based on the trends you notice and to be proactive rather than reactive when it comes to tax planning, benefits, and salary deployment.