In this post we will discuss the advantages of using a PEO and how it can help your business. According to NAPEO, 15% of small-to-mid-sized companies utilize this service1and businesses that use a PEO are 50% less likely to go out of business.2 Read below and find out why!
Before we jump into the multitude of benefits, let us define a Professional Employer Organization (“PEO”).
A PEO is a third-party entity that enters into a co-employment relationship with a company. In this co-employment arrangement, the PEO is responsible for payment activities (e.g., payroll) and often performs some or all other administrative duties that a typical employer completes (HR, training & development, benefits & insurance, etc.). However, PEOs relinquish control of day-to-day activities that comprise your company’s core business.
iAS offers PEO arrangements, which we will expand on below. But, first, we should mention that many of the following services can also be arranged in an à la carte service menu outside of a PEO / co-employment relationship. If any of the below pique your interest, contact iAS to see how our services can fit your business needs, without implementing a full PEO arrangement.
Without further ado, here are the top 5 reasons to consider a PEO:
- Providing employees with cost-effective benefits
If your company is small-to-mid-sized, you may find it expensive to offer competitive benefits such as health insurance. But, businesses in a PEO arrangement have 10%-14% less turnover3, meaning it’s a valuable arrangement that improves employee retention. Under a PEO, your employees become employees of the PEO, meaning your business leverages the size of an increased workforce across multiple companies. Increasing benefits while decreasing the cost enhances your recruitment of talented employees – and offers the type of benefits you and your employees deserve. Click Here: iAS Benefits
- Streamline your payroll
The IRS estimates ~33% of employers make a payroll error in a given year!4 A PEO will process payroll for your employees, meaning you no longer need to waste time with the administrative burden, along with knowing our payroll specialist will manage this part of your business to ensure accuracy. We can handle withholdings, W-2s, and other payroll quirks that eat up your time. And in today’s remote work environment, tracking employee working hours is a hassle. Let your business focus on what is does best – and let us take care of the administrative services for you. Click Here: iAS Payroll
- Access to retirement plans
Are you working for or run a small business, but wish you had or could offer access to retirement plans, such as a 401k? Approximately 40% of employees working for small businesses say that they would leave their current company for another that offers a 401k.5 The administrative burden of setting up retirement accounts can be daunting for some smaller businesses where time and resources are better spent on the core business. PEOs can offer retirement plans that are common at larger corporations. Retirement accounts are an important component of compensation for workers of all ages – don’t let that be a factor in losing talented and valuable employees. Click Here: iAS Benefits
- Worker’s Compensation
An employee comes to you to notify you they were injured on the job …what do you do? Employers who are in violation of workers’ comp laws can find themselves at risk of penalties as high as $500-$1,000 per day, or even a felony!6 Filling out claims forms, submitting paperwork to the insurance company, and ensuring you meet all stated deadlines can be dreadful. The process can be tedious and time consuming with a lot of on-the-fly research and nuances to navigate through. When you are part of a PEO, the PEO can file workers’ comp claims for you. Here at iAS, we’ve gone through the process, know the ins-and-outs, and can manage the claims process for your company. Click Here: iAS Benefits
- HR Compliance
hether it’s personnel problems or simply compliance issues related to hiring, firing, or notifications, HR can be a lot for a small- or mid-sized company to handle -and- put your company at serious risk. According to SHRM, a wrongful termination event can cost ~$85,000 in legal defense fees, with the average jury verdict being $500k.7 Outsourcing these initiatives can save time, not to mention manage compliance risks for your company. A PEO arrangement allows a company to rely on the PEO to handle the heavy lifting by having the resources you need, when you need them. iAS can assist with HR in a both a PEO relationship or an ad-hoc consulting role – contact us if you think we can help (we can). Click Here: iAS HR
There is no doubt a PEO relationship can save time and money for companies. Here at iAS we offer all of the above services and more. Whether it’s the full suite of services in a PEO arrangement or a mix-and-match of only the services you need, we can save you money while providing excellent customer service along the way.
What administrative tasks take up the most time for your business? Give us a call – our no pressure tactics allow us to start a dialogue with your business to strategize the best course of action for your business!
- How Common Is It For Businesses To Use A PEO? | Einstein HR
- Overview – NAPEO
- What is a PEO and How Does It Work? | GMS (groupmgmt.com)
- The Real Cost of Payroll Errors in the US (thepayrolledge.com)
- All about small business 401(k)s: 6 myths debunked | Human Interest
- How Workers Compensation Premium Errors Lead to Business Failures and Bankruptcy | Workers Compensation Consultants (workcompconsultant.com)
- High Cost of Non-Compliance – Elite HR Team