Professional employer organizations (PEOs) offer their small company customers human resource services, such as paying salaries and taxes and aiding compliance with a plethora of state and federal laws and regulations. Furthermore, many PEOs provide 401(k) plans, health, dental, and life insurance, dependent care, and other benefits not often offered by small firms. In doing so, they enable clients to outsource the management of human resources, employee benefits, payroll, and workers' compensation at a low cost. As a result, PEO clients may concentrate on their core competencies to preserve and improve their bottom line.
With the expertise and strategic vision of a PEO, you may be able to expand your business while being more secure. Typically, PEOs assist with the following:
PEOs handle payroll processing, and in some situations, they can pay local, state, and federal employment taxes. Numerous systems also combine payroll and time and attendance, reducing duplication of data entry and mistakes.
Co-employment frequently includes access to affordable, high-quality health insurance and dental care, retirement benefits, and other employee incentives. Typically, the PEO will manage employee enrollment and process claims for these benefits.
PEOs often employ compliance professionals who may assist you in avoiding fines and penalties. Their knowledge may encompass payroll tax legislation and reporting regulations, unemployment insurance, workers' compensation, and hiring and human resource compliance.
Along with workers' compensation insurance, PEOs occasionally provide safety assessments and training programs to assist you in limiting claims. They may also help with inspections conducted by the Occupational Safety and Health Administration (OSHA).
A PEO employs human resource specialists to offer human resource services and assistance in many circumstances. If you currently have an in-house human resources professional or team, the PEO works together on strategic and administrative levels.
Certain PEOs provide comprehensive personnel management services, including recruiting and strategic hiring, employee training and engagement, and performance management.
Have you exhausted all of your options? Simply put, not all PEOs are created equal. Choosing which one provides the best service, the best value, and the experience that your firm needs isn't always easy. Be a well-informed purchaser. Before you select a PEO, ask each organization the following eight questions. Are the members of the PEO's service team skilled in their fields? Do they have the necessary experience and qualifications to assist your company? To ensure that the PEO can appropriately handle a firm of your size, in your sector, and with your HR demands, ask straightforward questions. Determine whether the PEO's payroll and HR professionals have extensive professional training or certifications and hands-on experience. Are they conversant with the rules that govern the towns and states where you conduct business? Suppose your firm does business in jurisdictions with many or complex employment regulations, such as California, Massachusetts, and New York. It may be advantageous for the PEO you choose to be well-versed in those laws. It is preferable to have prior experience working in these distinct legal and regulatory settings. Some PEOs are only available online. These PEOs often provide services and assistance through self-service internet applications. They are ideal for do-it-yourselfers. Other PEOs provide fully staffed offices around the country. These businesses usually offer more personalized service and assistance. If you join one with a local office, you may be able to meet the PEO's service staff in person. The staff support ratio is the ratio of the PEO's service team members to the total number of employees at their client firms. This can be a valuable statistic for comparing the level of service provided by one PEO to another. A PEO with one service team member for every 2000 client workers may be less responsive to your demands than a PEO with one service team member for every 200 client employees. Examining the tiny print will assist you in ensuring that there is nothing that will impede you from taking the following step. Also, question your PEO representative about any unclear or troublesome words. EPLI can assist your company in mitigating the economic effects of a range of employment-related disputes, such as wrongful termination or violation of the Americans with Disabilities Act. Many PEOs offer EPLI coverage that you would not have considered otherwise. Knowing how much coverage you're getting (if any) might help you evaluate the degree of risk management provided by one PEO vs. another. To ensure that the PEO can provide you with long-term cost reductions, find out how much the PEO's service prices have climbed on average over the last few years. The most cost-effective PEOs can limit yearly service charge hikes to a minimum.
The PEO should provide answers to the following questions:
Workers of small firms that use a PEO obtain access to big-business employee benefits such as 401(k) plans, health, dental, life, and other insurance, dependent care, and other benefits that they would not otherwise receive as employees of a small business. Furthermore, when a firm works with a PEO, job security improves because the PEO implements efficiency to reduce employment expenses when employees are supplied with professional human resource services, increased benefits, training, employee manuals, safety services, improved communications, job satisfaction, and productivity rise.
The Small Business Efficiency Act (SBEA) of 2014 sought to clarify the connection between a professional employer organization (PEO) and its clients for the purposes of federal payroll taxes. The law's goal was to provide more excellent structure for who is accountable for what and how eligibility for certain tax credits is determined. As a result, a new categorization scheme for PEOs — the certified professional employer organization – was formed (CPEO).
There are various advantages to using a CPEO vs. a non-certified PEO, including:
While co-employment agreements are most prevalent in small and medium-sized firms, larger companies can also profit. PEOs are an excellent match for nearly any industry, including but not limited to the following:
After a client firm signs a PEO contract, the PEO will co-employ the client's worksite personnel. A co-employment connection occurs between a PEO, a worksite employee, and a client firm in a contractual allocation and sharing of employer obligations between the PEO and the client under a client service agreement (CSA). Typically, the PEO pays employees' salaries and withholdings and reports, collects, and deposits employment taxes with local, state, and federal authorities. Additionally, the PEO issues Form W-2s for remuneration received under its EIN. The client company retains ownership of and responsibility for product development and manufacturing, business operations, marketing, sales, and service. Specific tasks will be shared between the PEO and the client, as specified in the CSA. The PEO, as a co-employer, frequently provides a comprehensive human resource and benefit package to worksite employees.
At Premier PEO Consultants, we offer a full range of professional PEO consulting services and HR consulting services. To learn more about our services or to speak with a consultant, contact Premier PEO Consultants today.