PEO services – Helping to save time and money
When you run a company, you have to keep tabs on employment practices, provide
detailed employee handbooks, and comply with all federal and state labor
regulations. A professional employer organization (PEO) can manage these
administrative responsibilities and free up your in-house resources to concentrate
on growing the business.
Hiring PEO services involves more than simply passing your HR responsibilities
over to them: the PEO actually become a co-employer of your personnel. As
the legal "employer of record" for your entire staff, the PEO hires
your employees and leases them back to you. They then use their own tax ID
to submit payroll records and file taxes, offer benefits, and secure workers'
compensation insurance.
PEO services may appear to be a solution for large companies, and they certainly
can be. But the majority of PEO customers are actually small businesses with
15 - 20 worksite employees and little to no HR staff in-house. It all depends
on what your company wants to do. PEOs help the little guy obtain the savings
and benefits that large companies enjoy. Meanwhile, they allow large businesses
to offer employees new benefits that are difficult to administer and manage – such
as 401k and flexible spending plans.
So what does a PEO offer?
A PEO vendor brings the four core competencies of business to your organization:
- Safety and risk management: If you’re looking
for the key selling point of PEO services, this is it. PEOs assume liability
if somebody gets injured on the job or accuses a co-worker of harassment.
They also ensure compliance with all employment laws and OSHA regulations,
and assure there's no discrimination of age, sex, or race in the hiring
and policies.
- Payroll processing and taxes: PEO services take responsibility
for your payroll taxes and responsibilities. This includes distributing
paychecks, processing direct deposits, deducting taxes and retirement account
funds, and sending out year-end tax statements.
- Benefits administration: Saving money is a top concern
for every business, and PEO vendors help tighten purse strings with discounted
rates for health and dental insurance, disability plans, life insurance,
employee retirement plans, and COBRA.
- HR management: PEO vendors ensure compliance with ever-changing
federal and state labor regulations. They help create employee handbooks
and training documentation and place updated labor law posters where staff
can see them. They also help recruit new talent by advertising for open
jobs, prescreening candidates, and conducting background checks and drug
screenings.
The costs of PEO services can vary based on industry and the services you require.
In addition to an initial setup fee – usually $1,000 to $5,000 – PEO
vendors charge 2% to 6% of each employee’s gross salary per pay period.
They may also charge additional fees for some payroll services, recruitment
methods, and training, or bundle all services into a single package.
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