5 Signs that You Can Trust Your PEO

Trust is one of the most important factors in any business relationship. It is even more important when the relationship involves sensitive functions, such as accounting or human resources. 

Partnering with a Professional Employer Organization (PEO) is the best way to outsource HR functions and streamline the running of your business. However, you need to be sure you can trust them with your and your employees' personal information and confidential data. So, how can you tell you have found a trustworthy PEO? 

Trust Matters More With a PEO 

You need to trust your PEO almost more than any other vendor or outsourcing partner. Your PEO will be responsible for some extremely important business functions, such as: 

• Processing and filing payroll taxes. Most outsourcing partners and payroll providers tell you what tax you owe, and you have to double check before filing. A massive advantage of a PEO is that they can file the taxes for you, but this means you need to be able to trust them to do it right. 
• Keeping your business compliant. Smaller businesses simply can't afford a full-time compliance officer. PEOs can, and thus they can help keep you compliant and reduce your worries. Again, though, you need to be comfortable trusting them to do it right, or you will be constantly checking on them...or worse, have a relationship with a key employee destroyed. 
• Providing competitive employee benefits. A major advantage of working with a PEO is that they can add your employees to their master benefits plans. You need to be able to trust that they really are offering the kind of benefits you need to be offering to attract top talent. 
• Managing workers' compensation and unemployment insurance. These are legally mandated costs of doing business. A PEO can help keep your costs down, but you need to trust that they are not going to let you down and get you in trouble. 

A problem in any of these areas can be a disaster for your business. So, how do you know your PEO can be trusted? 

5 Indicators of a Trustworthy PEO 

There are five basic indicators that you have found a trustworthy PEO who will do right by you and your employees. Look for personalized services, pricing transparency, flexible contracts, IRS certification, and satisfied clients. 

Personalized Services 

Every business is different. Just like one-size-fits-all clothing doesn't really fit anyone, so a one-size-fits-all HR plan won't actually fit any business. Make sure that the PEO you choose personalizes services to your needs, avoiding underutilization and overpaying, and making sure the service you need is really being offered. 

On top of that, it's important to develop personal relationships with the PEO's staff. Apart from anything else, if your PEO has such high turnover that you never talk to the same person twice, how can you trust them to help you keep your turnover down? You should have dedicated people that answer the phone when you call. Your calls should not be directed to an offshore call center, which is not uncommon with large national PEOs. 

Pricing Transparency 

Nobody wants to be nickeled and dimed with hidden charges, but too many PEOs pull this. You should never see a charge on your bill that you didn't expect or have to ask about. A good PEO includes all of the contracted services in a single charge. Typically, the charge is either a percentage of payroll (POP) or per employee per month (PEPM). You may not be paying quite the same as another company, for example, if you opted out of certain services that are not relevant, but you will know what you are paying and how it is calculated. 

You should get a good heads up about any price increases, which are typically annual or less frequent. That said, be wary of a PEO that locks in your price for years; there is a very real risk that they will eventually have to hike your fees rapidly to "catch up."   

Also avoid "fee inclusive" pricing, which commonly has you paying for services you don't use. Such services can always be added later if you do find you need them.  

Flexible Contracts 

If a PEO locks you into an extended contract and charges you a hefty cancellation fee, that should send a clear message: they don't think you'll stick around unless forced. 

In fact, this should be one of the biggest red flags that you have found an untrustworthy PEO. They know you will want to leave, so they make it as hard as possible. They can be worse than cable companies!   

A good PEO has the confidence that you won't want to go anywhere once you have experienced their services. They typically let you terminate the contract freely, usually with 30 days notice. 

IRS Certification 

The IRS does not endorse or recommend a particular PEO. However, they offer a rigorous certification process that demonstrates that the PEO understands the process. Choosing a certified PEO means: 

• They will be absolutely liable for any payroll mistakes, such as filing late. 
• They have posted a $1 million bond to ensure that federal taxes will be paid even if they have a cash flow problem or worse. 
• You can claim all of the tax credits you would be eligible for if not using a PEO. 

It also proves that they care enough to go through the process.   

Satisfied Customers 

Last, but far from least, your PEO should be able to present a long list of references and case studies. You should be able to check customer reviews. Look especially at reviews and case studies that are in your own industry, which helps ensure that the PEO is aware of your specific legal and compliance needs. 

If you're really lucky you can find a PEO like Questco, which has won the Best of HR Services - Client Satisfaction award for three years in a row. 

Trust is Earned 

PEOs that exemplify those five factors are more likely to be trustworthy compared to others. While earning trust takes time, looking at these factors can help you know that the PEO you are choosing is likely to be trustworthy. It reduces your risk of being let down, having to deal with a tax or compliance issue, or going through the hassle of switching.