November 18, 2022 | By Questco
Most HR outsourcing tactics only save your HR people time. For example, many businesses hire a payroll processor to handle calculating payroll taxes and telling you what you need to remit. This often has a negative ROI, especially as your business grows.
On the other hand, a professional employer organization (PEO) is a comprehensive solution that handles all of your administrative tasks. Unlike other outsourcing solutions, PEOs give you access to cost savings regarding employee benefits. This is possible through a legal agreement called “co-employment.”
Co-employment means that, while you retain complete control of your employees for hiring, firing, promotion, etc., the PEO becomes their “employer of record.”
This means that the PEO is their employer when it comes to offering benefits, filing taxes, etc.
Not only does this mean that a PEO can file taxes for you, but it spreads out liability. The PEO becomes responsible for HR compliance. That means everyone faces less risk, including you and your employees.
You need your HR team to use their intimate knowledge of your company to support your strategic goals, find good candidates for open positions, and build a culture that makes people want to stay.
Any time they spend on mundane administrative burdens takes away from this. Smaller companies may be in a worse position, with business owners taking time away from revenue-generating activities to handle the paperwork.
A PEO will take those tasks off your plate.
They can process payroll for you and remit the taxes, handle compliance, and administer benefits.
They can even deal with unemployment and workers’ compensation claims. This is important if you have employees in multiple states. Compliance becomes more complicated when you have to deal with different state and local requirements, but a PEO has full-time people who are experts at multi-state payroll and other HR tasks.
With a PEO, you and your HR people can concentrate entirely on growing your business, reducing conflicts, and having a plan for the future.
Best-in-class PEOs provide a staff of HR experts ready to help anytime during business hours.
Can’t afford a compliance officer?
PEOs have that handled, but it doesn’t stop there.
A professional employer organization can help create an employee handbook that keeps the rules clear and makes new hires feel welcome. They can help you with a safety program to reduce downtime and workers’ compensation costs.
With a PEO you don’t need to try and find people with all the expertise you need because they already have an entire team, and you can use as much of their time as necessary.
Small businesses often struggle to afford top-tier benefits. You simply don’t have the leverage or buying power with only a few employees. However, when you partner with a PEO, your employees are added to their master benefits plan.
The PEO’s master benefits policy is negotiated skillfully and, more to the point, with much greater economies of scale. The PEO can bring to the table all of the companies they work for, speaking on their behalf. This means that you have the equivalent of thousands of employees when negotiating benefits.
Insurance companies will be much more willing to give a reasonable rate, allowing you to spend less money on better benefits. You’ll find even more savings with the PEO’s retirement plan, long-term disability, family benefits, etc.
Providing good benefits is key to competing for good talent. If your benefits are substandard, then good employees will go elsewhere. You might even lose existing talent when they realize that you don’t provide benefits for, for example, their new baby. Furthermore, if your employees have good healthcare, they are more likely to get preventive care, vaccinations, etc., reducing downtime and the amount of sick time they take.
With a PEO, your company can grow faster. You will have fewer things to worry about, especially in the areas of risk and compliance. A PEO will help your company thrive!