Well, it’s a delicate question that deserves a dignified answer. A professional employer organization (PEO) is an outsourcing company that provides valuable services for small and mid-sized businesses (SMBs). Over the past 30 years, the PEO industry has become a flourishing segment of the U.S. economy, significantly impacting countless companies and showing consistent expansion. Bravo!

Naturally, the assistance offered by PEOs helps businesses around the United States work more efficiently, enhance their bottom lines, and grow at rapid rates. Most PEOs provide the following services.

Continue reading to learn more about how PEOs, like Employer Advantage, work with their clients to make their lives easier!

How PEOs Operate in Conjunction with Their Clients

PEOs live to serve—and they like to handle the heavy lifting, too! Our shared-employment model allows our clients to remain in complete control of their employees (hiring, firing, etc.), but we deal with the repetitive (yet necessary) administrative tasks like filing taxes and processing payroll.

And when we say “shared,” we mean shared. We take full responsibility and are held liable for any mistakes made on our end, which takes the pressure off our clients. We also take measures to reduce any liability our clients might face.

For example, if one of our clients wants to fire one of their employees, we will guide them through the entire process. We’ll file the proper documentation and investigate the incident(s) that led to the firing if we deem it necessary. This way, nothing unexpected comes back to bite our clients in the future.

Typically, a PEO is the technical employer of its clients’ employees, resulting from a contractual co-employment arrangement with clients. When set up this way, PEOs become the employer of record (EoR) for tax purposes by filing paperwork related to payroll taxes using their own federal employer identification number (FEIN). Less risk for clients and less paperwork, too. What a jolly combo!

As the legal employer, the PEO is in charge of withholding all appropriate taxes, paying taxes related to unemployment insurance, and offering workers’ compensation coverage to the client’s employees. This way, clients hardly have to lift a finger.

Some Benefits of Using PEOs for Small and Medium-Sized Companies

Employing the diverse capabilities of a PEO can have many advantages for small business owners, like yourself, especially those who may not possess… 

(1) the depth of HR know-how or sufficient skills to perform functions, such as payroll and using human resources information system (HRIS) software. (What an undertaking!)

(2) the time and means required to do a wide range of transactional HR functions, such as preparing workplace policies, hiring and training new employees, handling the administration of employee benefits, and other day-to-day tasks. (Heavens, that’s a tall order!)

You stand to gain the following advantages by working with a PEO.

  • Company growth
  • A lower employee turnover rate
  • A lower probability of going out of business
  • An excellent return on investment (ROI) in terms of cost savings
  • A shift in employee liability to the PEO
  • More benefits options (often at lower rates)
  • Gains in economies of scale through the use of these increased options

Don’t turn a blind eye to results as dashing as these!

Additional Advantages of Utilizing PEO Services

As if you needed more convincing, some other ways you can benefit from using a PEO are as follows.

  • You gain access to the PEO’s full benefits suite. If you decide to remain on your current benefits plan, the PEO will administer it for you. This is particularly helpful for small businesses.
  • A PEO’s economy of scale allows your business to reduce its employment costs, thus enhancing its bottom line.
  • Through its services, you avoid the need for internal HR employees.
  • PEOs help you comply with federal, state, and local laws and regulations, thus guarding you against potential legal liability.
  • You may be able to pay the PEO a minimal up-front fee for a substantial state-of-the-art service system or platform. 
  • The PEO generates significant time savings by dealing with mundane and repetitive jobs, thus allowing you to dedicate more attention to your primary area of expertise and enlarge your profit margin.

5 Things to Consider Before Deciding to Utilize Payroll and HR Outsourcing

PEOs are a sound choice, but it’s essential to consider your business’s situation before committing to utilizing the services provided by a PEO. Below are some superb factors to consider.

  1. Ensure the PEO’s blanket insurance coverage is with a top-tier insurance carrier and provides the comprehensive coverage you require.
  2. Evaluate the PEO’s fees, markups, upcharges, and splits, as well as the total financial impact on your company. Where will you save money, and where will there be an increase in costs? How do the costs and savings compare to alternative options?
  3. Make sure that you fully understand the nature of the co-employment relationship between the PEO, your business, and your employees.
  4. Make sure the PEO will benefit you and your employees. How will it impact your organization as a whole? Will it free up time for your employees and management?
  5. Last but not least, evaluate your company’s position. Is this the right time to partner with a PEO? Is your company growing?

Now, here’s the bottom line. If you employ the services of a helpful, handy PEO, you can finally do what your company does best—without having to manage anything outside of your core business operations. However, before entering into a contract agreement with a PEO, be astute!  Thoroughly review them and give them a spin around the ole block if possible.

Outsourced Payroll and HR Services for Kansas City Businesses!

For more than 30 years, we’ve been at the beck and call of Kansas City companies, large and small. It’s no secret that providing businesses with comprehensive HR and payroll-related services is what we do best! It’s been our honor and privilege to shoulder our clients from the burden of HR functions, managing employee benefits, and managing payroll so they can focus on what matters most!

If you are interested in outsourcing some or all of your HR functions and payroll processing, email us at simplifyyourhr@employeradvantage.com or give us a ring at 1 (877) 266-9147.