PEO Companies
Tips & Advice to help you make your decision on PEO Companies
Professional employer organizations or PEO companies arethose which provide a series of integrated services for client companies. Theservices that might be included are generally human resources, payroll,employee benefits and other compensations. They also include handling insuranceand workers' compensation matters. This leaves the client business free tofocus on operations and sales.
PEO companies traditionally take a percentage of thetotal payroll of the client company as fee for providing these services,usually between 3 and 15 percent. Because they can handle more than one companyand because they can claim the employees of each client as their own, PEOs cannegotiate for better deals on many of the services they provide because oftheir large volume of employees. This benefits both the PEO and the clientcompany.
Professional employer organizations are an economic andconvenient way for small businesses to manage their integrated personnelissues. By letting another company manage this aspect of their business, theyare free to focus on product development, production, sales and other areas ofthe business. The client business owner does not have to worry about compliancewith regulations in regards to employee matters because the PEO takes care ofeverything. It is an advantageous arrangement for both companies.
Professional Employer Organizations (PEOs)
Outsourcing HR is becoming popular for small businessBy Toni Klym McLellan, Freelance Writer & Editor Toni Writes Hiring and managing employees is one of the most burdensome tasks a small business faces. You have too many other things to do besides worry about recruiting workers, offering benefits, managing payroll and an arsenal of payroll tax issues, as well as workers’ compensation and other items.
Professional Employer Organizations (PEOs) offer a solution to this problem. Delegating core HR tasks can save time, resources, and headaches – allowing you concentrate on core business endeavors.
The benefits of hiring a PEO include:
- Built in expertise – PEOs know the legal and logistical requirements pertaining to their services so you don’t have to wander the mazes of employment regulations and bookkeeping know-how.
- Bundled HR assistance – most firms provide multiple human resource needs, saving companies from having to do payroll, background checks, and benefits management in-house.
- Lifting the burden of potential litigation – many PEOs also offer risk assessment and liability protection.
Determine your human resources needs
If your company has employees, chances are it could benefit from a PEO. They saves time wading through employment regulations or performing background checks and let you get down to business.
Try: Take Administaff's Company Profile Test for a free evaluation of your HR needs. Staffmarket.com offers a PEO comparison sheet for selecting a PEO based on services needed.
Shop around
With hundreds of PEOs to choose from, finding the best one for your company can be daunting. Professional organizations and private vendors both offer listings of member PEOs, some by sending several free quotes from local PEOs.
Try: Check out c|net's Alpha blog for an overview of how to choose the right PEO. Get free quotes from up to five PEOs in your area from BuyerZone.com or check StaffMarket.com's extensive listing of PEOs (check out their buyer's guide while you're there). The NAPEO web site also features a searchable database of member PEOs.
Ensure a seamless fit with your business
When you've narrowed your choices, be prepared to ask detailed questions. What kind of written agreement governs your relationship? What if you're not satisfied with services offered? What certification and/or licensing does the PEO carry? What assurances regarding employee litigation can the PEO offer?
Try: Track industry trends by reading the National Association of Professional Employer Organizations' PEO Insider and BuyerZone.com's PEO Buyer's Guide, which offers information on the nature of the PEO co-employer agreement.
- Remember that you may not necessarily save money using a PEO, but you will save time managing myriad HR issues.
- Check to see whether your PEO is licensed by your state.
- Have an attorney review the service agreement between your company and the PEO.
- Reassure your staff that their jobs are not in jeopardy due to outsourcing; the PEO is there to manage human resources issues.
- Ask what services are offered as a package or “a la carte.”
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