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Considering a PEO?

02/04/2016

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Is A PEO the Right Model for My Company? 

Previously, we've discussed the benefits of bringing on a Professional Employment Organization, or PEO, to help manage one's business. A PEO, which operates as a co-employer of your business, 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 let us help you decide whether or not a PEO is right for your company.  

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.

Benefits Considerations

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.

New Companies

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 on-boarding employees and making your business compliant with state and federal regulations.

State 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 entails.

Ultimately, there are a few questions you need to ask yourself if you're considering the PEO model. Is handling HR in house exhausting resources and becoming too great a burden? A PEO might be an ideal solution. Contact LBMC Employment Partners to discuss PEO, HRO, and HR services.

Learn more about our PEO.

Posted in: PEO, HRO