What is a PEO? A PEO (Professional Employer Organization, also known as an employee leasing company) is an outsourcing company to whom a business can transfer its payroll and human resource responsibilities without giving up day-to-day operational control of its employees.
Many people confuse the PEO concept with staffing agencies or temporary employment services. PEO's work only with the permanent employees of a company. The PEO becomes a co-employer and provides payroll services, workers' compensation, health benefits, and Human Resource services. These functions are necessary to comply with federal and state employment laws, but distract an employer from the activities that contribute to their bottom line.
By using a PEO, you can focus on the revenue-producing activities that will grow your business while the PEO takes care of the non-revenue producing activities,
such as:
- Payroll
- Workers' Compensation
- Health Benefits
- HR Services
- Retirement Plan
See the Questions and Answers below for these topics.
Q: What about payroll?
A: Payroll administration is the most visible activity a PEO does. This function provides the business owner with the following:
A: When a small to medium sized business shops for workers' compensation, they are often dismayed at how expensive rates are. By being with a PEO, they are able to pool their employees in with a larger group and get more buying power. For some companies, this could mean the difference between staying in business and closing their doors.
Q:What kind of employee benefits can I offer?
A: Another area in which a business owner has a challenge competing is employee benefits. In order to get competitive rates for quality benefits, small businesses once again gain from pooling their employees in with a larger group. By being with a PEO the client company can get good rates without having to spend the time calling various insurance companies and negotiating. By having a superior benefits program, small businesses are able to attract and retain quality employees. Some of the benefits offered by a PEO are:
Q: What do you mean by HR department?
A: An often overlooked but extremely important area in any business is the Human Resource department. Since few small businesses have the resources available to hire an in-house HR staff, it is a challenge to keep up with the ever-changing employment laws. With the number of employment lawsuits growing, small businesses are at risk of being sued by their employees, current and former. By being with a PEO a business has an off-site HR department to offer assistance in employee issues. Areas in HR in which the PEO can help are:
A: We can do a 401(k), but there are also other options. The 401(k) plan is actually a very complex and expensive option for retirement savings for small businesses. Let us help you explore other options, like a SIMPLE plan or a traditional IRA which are both cost effective tools for small businesses.
A: Payroll administration is the most visible activity a PEO does. This function provides the business owner with the following:
- Preparing the paychecks and offering direct deposit
- Various ways to input payroll, such as fax, phone, internet and email
- Making tax deposits
- Preparing and mailing W2s
- Job Costing and Certified Payrolls
A: When a small to medium sized business shops for workers' compensation, they are often dismayed at how expensive rates are. By being with a PEO, they are able to pool their employees in with a larger group and get more buying power. For some companies, this could mean the difference between staying in business and closing their doors.
Q:What kind of employee benefits can I offer?
A: Another area in which a business owner has a challenge competing is employee benefits. In order to get competitive rates for quality benefits, small businesses once again gain from pooling their employees in with a larger group. By being with a PEO the client company can get good rates without having to spend the time calling various insurance companies and negotiating. By having a superior benefits program, small businesses are able to attract and retain quality employees. Some of the benefits offered by a PEO are:
- Health insurance
- Long and short term disability
- Maternity Benefits
- Prescription Drug Coverage
- Vision
- Dental
- Flexible spending account
- Life insurance
- 401(k)
Q: What do you mean by HR department?
A: An often overlooked but extremely important area in any business is the Human Resource department. Since few small businesses have the resources available to hire an in-house HR staff, it is a challenge to keep up with the ever-changing employment laws. With the number of employment lawsuits growing, small businesses are at risk of being sued by their employees, current and former. By being with a PEO a business has an off-site HR department to offer assistance in employee issues. Areas in HR in which the PEO can help are:
- Sexual harassment
- FMLA (Family Medical Leave Act)
- Drug testing
- Employee handbooks
- Job descriptions
- Employee reviews
- Employee counseling
A: We can do a 401(k), but there are also other options. The 401(k) plan is actually a very complex and expensive option for retirement savings for small businesses. Let us help you explore other options, like a SIMPLE plan or a traditional IRA which are both cost effective tools for small businesses.
