What is a PEO?
A PEO, or professional employer organization, allows businesses to outsource their human resource functions like payroll, onboarding, employee benefits, and other administrative tasks. With help from a reliable PEO, business owners can focus on other critical aspects of their company and improve their company’s growth trajectory.
How does a PEO work?
When a business outsources to a PEO, the two entities enter a professional relationship known as co-employment. A co-employment relationship happens through a contractual agreement that distributes specific employer responsibilities between the PEO and the client company. This contractual agreement is often called a Client Service Agreement or CSA. A CSA typically outlines the following business responsibilities:
PEO responsibilities:
- Offers support to the client company’s in-house HR team
- Oversees employee wages, benefits, and withholdings
- Monitors complex employment laws and offers risk management strategies
Client company responsibilities:
- Supervises day-to-day business operations
- Oversees the hiring and management of employees.
- Maintains non-employee-related business operations, such as sales, marketing, and customer service.
- Works with an HR team to address terminations, areas of high risk, and other employee-workplace concerns
Under a CSA, PEOs and client companies may agree to share specific administrative responsibilities. For example, these two entities can work together to develop an employee handbook outlining employee responsibilities and etiquette.
What are the Benefits of a PEO?
While it may be challenging to let go of certain parts of your business, hiring a PEO can be a great way to take care of time-consuming tasks. Although it’s ultimately up to you whether you want to divide and conquer with a PEO, we’ve compiled a list of significant benefits that you’ll want to check out before making your decision:
Improved Employee Benefits
PEOs can bring your business a wider range of employee benefits, often for a better
cost. Because your worksite employers are combined with the PEO’s co-employees,
your business becomes eligible for health coverage on par with those of larger
corporations. When you team up with a PEO, your employee could reap the following benefits:
- Medical, dental, and vision coverage
- Retirement plans
- Life insurance
- A healthcare flexible spending account
- Disability insurance
- Adoption insurance
- Persona accident insurance
- Commuter benefits
- Educational assistance
Time and Money Savings
If you’re looking for savings, a PEO is the best move you can make. By taking over your business’ tedious, time-consuming tasks, a PEO can save you valuable time which can be dedicated toward more critical operations.
A PEO can also save you money in many ways. Through better-recruiting support, performance management, and HR strategies, a PEO can reduce your overall business spending and serve as a significant investment in your workforce.
Reduced Risk
Running a business does not come without risk. However, a PEO can help mitigate any
risk associated with employment laws, tax regulations, etc. By teaming up with a PEO,
you can reduce your margin of error in the following areas:
- Reporting, collecting, and depositing taxes with state and federal entities
- Equal employment opportunity reports
- I-9 requirements
- Employee-related claims and provision of Employee Practice Liability Insurance
Business Growth
A PEO can be a major asset for your business’ overall growth and success. With improved benefits packages, effective HR communication, and more, you can recruit and retain top talent that will maximize your business’ true potential.
At MonsterQuoter, we simplify your search for group health insurance. When you use our tools to shop for your small business medical coverage, you’ll find the best benefits in just minutes! If you’re ready to start investing in your business’ growth trajectory, connect with our team to shop for renewal quotes, PEO quotes, and more today!
