Professional Employer Organizations (PEOs) are on the rise. Since 2012, the industry has more than quadrupled in size, with over 200,000 businesses now partnering with a PEO. And there’s a reason for this growth. Studies show that:
- Companies save an average of 27% in total business costs when they partner with a PEO.
- Annual median growth for PEO users is double that of companies that don’t engage with a PEO.
- Businesses hiring a PEO have been shown to grow twice as fast and are 50% less likely to go out of business.
Despite these compelling statistics, many misconceptions about cost, control, and complexity persist.
At LBMC Employment Partners, we’ve spent years helping business leaders make informed decisions about partnering with a PEO. Through our work with both current clients and those considering a PEO for the first time, we’ve heard nearly every myth out there. In this blog, we want to clarify some of the common misconceptions we frequently encounter in these conversations.
5 Common PEO Myths Debunked
Myth 1: “I’ll lose control of my business if I join a PEO.”
One of the biggest fears leaders have is that joining a PEO means giving up control. That couldn’t be further from the truth.
With a trusted PEO like LBMC Employment Partners, you retain complete authority over your business operations, your people, and the decisions that drive growth. A PEO partner acts as a guide, helping you streamline HR and reduce administrative burdens. By becoming the employer of record for tax and insurance purposes, the LBMC EP team handles payroll, benefits administration, compliance, and other non-revenue-generating tasks on your behalf.
We see ourselves as an essential partner. Our role is to take on the HR administration and tasks so you can focus on your people and business strategy for leading your organization.
Myth 2: “PEOs are only for large companies.”
Small to mid-sized companies gain the most advantages from a PEO because they often lack a robust HR infrastructure.
In many of the businesses we serve, HR is often a one-person department. That person is responsible for a wide range of tasks, including benefits, compliance, employee relations, HRIS management, and more. Or, in some cases, there’s no HR resource at all. Without a PEO, affordable benefits are often out of reach, and compliance issues can create real risks.
By partnering with a PEO, smaller companies can access enterprise-level benefits and HR expertise they otherwise couldn’t afford. In other words, PEOs help level the playing field.
Myth 3: “PEOs replace my HR team.”
PEOs add to your team; they do not replace it. Whether your company has a full HR department, one HR manager wearing multiple hats, or is bringing on HR support for the first time, a PEO adds expertise, resources, and scalability. Instead of replacing people, we become a trusted partner.
Think of it this way: your HR team knows your culture, your people, and your day-to-day needs. A PEO brings the systems, compliance support, benefits administration, and benchmarking data to strengthen that foundation. Together, you can achieve more.
Myth 4: “All PEOs are the same.”
Not all PEOs operate the same way. Some specialize in certain industries. Others focus heavily on technology and self-service, putting people second. Larger, national PEOs may offer broad resources but often lack the personalized attention that smaller businesses or startups need.
The truth is, the experience can look very different depending on the provider you choose. That’s why it’s important to evaluate what matters most to your company.
At LBMC EP, we combine nationally competitive benefits with responsive, high-touch service. Our clients gain the advantage of scale along with the partnership of a team that knows their business inside and out. That’s not something every PEO can offer.
Myth 5: “It’s too hard to switch providers.”
Change can feel overwhelming, especially when it comes to something as important as HR and benefits. Many leaders worry the transition to a PEO will create more disruption than it’s worth.
With the right partner, switching is manageable and straightforward. Engaging with a PEO indeed requires providing information to get started (e.g., employee demographics, current plan details, and cost information), but from there, the PEO should take the lead.
At LBMC EP, we guide clients step by step with clear timelines, dedicated resources, and ongoing communication. Our goal is to make the process seamless so your team can focus on business, not paperwork.
Bonus Myth: “Large companies don’t need a PEO.”
It’s true that many small and mid-sized businesses benefit the most from a PEO, but larger companies also see major advantages.
In fact, when looking at the resilience-related benefits of joining a PEO, companies with 50–499 employees saw a substantial 3.1% increase in one-year business survival rates compared to non-PEO firms of the same size
In short, size doesn’t determine whether a PEO is valuable. The right PEO adapts to your needs, whether you have a growing business or an established enterprise.
Conclusion: Finding the Right Partner
PEOs aren’t about giving up control or complicating your business. They’re about gaining support, guidance, expertise, and resources that help your company thrive. While myths about PEOs are common, the reality is they’ve become a proven way for businesses of all sizes to strengthen HR, reduce costs, and improve employee satisfaction.
LBMC Employment Partners is a partner invested in your success, offering the flexibility, service, and insights that national firms can’t match.
Curious whether a PEO is right for your business? Download our free PEO Readiness Checklist or connect with our team. We’re here to answer your questions and help you find the best solution.
