A growing business is a good problem to have, but it’s still a problem when your internal HR can’t scale as fast as your vision. Whether your business is expanding across state lines or navigating the changing landscape of employee benefits, the complexities of managing people can feel like it’s taking more time and energy than it should. That’s why more growth-stage companies are turning to Professional Employment Organizations (PEOs).
But what is a PEO, exactly? How does it work? And is it worth making the switch?
Making a change to your HR model is a big decision. LBMC Employment Partners is a PEO-first company built to support growth-focused businesses with the high-touch, high-trust HR, payroll, and benefits solutions they need to scale. When you work with us, you don’t get ticketing systems or an 800 number. Instead, you work with real people who help guide your transition and ensure you feel confident every step of the way.
In this post, we’re unpacking what a PEO is, how it works, and why it’s a smart business move in today’s economy.
What Is a PEO?
A PEO is a human resources partner that helps businesses manage critical employee-related tasks like payroll, workers’ compensation, benefit administration, and tax and regulatory compliance through a co-employment agreement.
Here’s what that means: You retain control of your business operations and people decisions. The PEO becomes the employer of record for tax and insurance purposes, allowing us to handle all administrative responsibilities on your behalf.
That shared relationship can give you access to big-company perks and expertise, without having to build an internal HR department from scratch.
For growing companies, a PEO becomes a single point of contact for:
- Payroll processing and payroll tax administration
- Competitive employee benefit plans
- HR support and compliance guidance
- Workers’ compensation and workplace safety programs
- Streamlined onboarding and employee relations
In short, a PEO takes the weight of HR off your plate so you can focus on building your business.
Why a PEO Is a Smart Business Move
Partnering with a PEO isn’t just about saving time. It’s a strategic move that can fuel your business’s growth and strengthen your workforce. Here’s how:
1. Big-Time Benefits Without a Big-Time Budget
Most growing businesses can’t afford to offer enterprise-level benefits on their own. A PEO pools employees across clients, giving your people access to high-quality health plans, retirement options, and more at competitive rates.
FACT: Among companies with 10–49 employees, 52% of PEO users offer retirement plans, compared to just 23% of non-PEO users. (Source)
2. Hire Smarter and Keep People Longer
From the moment someone applies to the moment they reach their first anniversary, every touchpoint matters. With a PEO, you’ll streamline onboarding, ensure timely payroll, and offer benefits that keep employees around for the long haul.
FACT: PEO clients see 12% lower employee turnover. That’s no surprise when your benefits stand out. (Source)
3. You Don’t Need an In-House HR Team to Act Like One
Not every business is ready (or able) to build a full HR department. With a PEO, you get access to HR pros who live and breathe compliance, employee relations, and policy creation so you don’t have to.
FACT: The average ROI of a PEO is $1,775 per year per employee. (Source: NAPEO)
4. Stay Ahead of Compliance (No Googling Required)
If you’ve ever had to scramble to understand new state labor laws or file a last-minute payroll tax correction, you know how stressful compliance can be. A PEO keeps you up-to-date and compliant, so nothing falls through the cracks.
5. Focus on Growth—Not HR Admin
Your time is too valuable to be spent troubleshooting benefits or researching PTO laws. A reliable and hands-on PEO like LBMC Employment Partners gives you the freedom to focus on strategy, sales, and service, while we handle the rest.
FACT: PEO users report 16% higher profitability and double the median growth of non-PEO companies. (Source)
6. Bring Everything Under One Roof
Instead of juggling multiple vendors and platforms, a PEO consolidates your HR, payroll, benefits, and compliance into one integrated solution. You can work with one centralized team that knows your business and has your back.
How Do PEOs Impact Your Industry?
We serve a wide range of industries, each with unique challenges and compliance requirements. Here’s how a PEO model makes a difference across sectors:
Healthcare (Senior Living, Medical Practices, Long-Term Care)
With a PEO, healthcare providers can better manage high turnover, evolving insurance and governmental regulations, and critical safety training needs. We help healthcare leaders ensure compliance with OSHA and HIPAA, streamline payroll for clinical and non-clinical staff, and offer competitive benefits to improve retention.
Professional Services (Accounting, Legal, Tax, Consulting)
In client-focused industries, your people are your product. A PEO helps attract top-tier professionals through competitive benefits and smooth onboarding while ensuring your internal policies and handbooks are airtight.
Multi-Unit Operators and Franchise Owners
Managing staff across multiple locations (and sometimes states) can quickly get complicated. A PEO consolidates payroll, compliance, and benefits across locations to reduce risk and increase efficiency so you can scale with confidence.
Nonprofits and Startups
Running lean is part of the job, but HR shouldn’t fall through the cracks. Nonprofits and new ventures benefit from the structure, support, and cost-efficiency of a PEO model, especially when trying to offer retirement plans or retain key staff on a budget.
Construction, Manufacturing, and Field Services
For businesses with field-based teams, safety and compliance are non-negotiable. PEOs can enhance manufacturing success by helping companies reduce workers’ comp claims, implement OSHA-compliant safety programs, and manage payroll and taxes for hourly or shift-based workers across state lines.
How Do You Choose the Right PEO Partner?
Choosing to work with a PEO can be a game-changer, but it’s important to understand how the model works, what to expect, and how to select the right partner.
Not all PEOs are created equal. Some may focus on providing basic payroll and administrative support, along with standard benefits and limited access to additional HR services. Other PEOs offer customers access to advanced technology platforms, including self-service tools.
When evaluating your options, it’s important to choose a PEO that not only offers the services and tools you currently require but also has the ability to grow and evolve with your business over time. Here are some questions to consider while looking for the right fit for your business:
- People
- What is the scope of services each team member will deliver, how, and how often?
- Do you have a dedicated contact person at your PEO, or do you have to call a 1-800 number?
- Process
- What are the transition steps for implementation, orientation, and enrollment?
- During the plan implementation, what are the goals and timelines?
- What support will be provided?
- Platform
- Identify levels of employee and management access, orientation, and training.
- How will the PEO coordinate with IT staff for system integration, automated attendance, point-of-sale systems, and third-party software and hardware?
- Programs
- What benefits are included?
- Is an Employee Assistance Program (EAP) offered?
- What about life and disability insurance?
- Price
- How is the cost of services calculated?
- Some PEO providers calculate based on a percentage of payroll, while others charge a monthly fee based on the number of employees.
LBMC Employment Partners can be a true extension of your team. Our people-first approach means you get real answers from real experts, not automated replies or call center scripts. From our Nashville headquarters, we support clients across the country with scalable, strategic HR solutions designed to help your people and your business thrive. Our team is happy to answer any questions you may have about what a PEO partnership with us can do for your business. Contact us today.
