PEOs Have Much to Offer Growing Businesses

20 Feb PEOs Have Much to Offer Growing Businesses

By: Felicia Vestal for PEO Compass, picture by rawpixel on Unsplash 

I personally love reading articles from the past and comparing them to the present time. Below is an article published in Inc Magazine on August 30th, 2017.

I believe many of the factors stated in this article are still very relevant. PEO’s are still looked over from businesses as they are not educated on what a PEO can offer. In 2017 there were 907 operating PEO in the United States and with the rise of new PEO’s with specialty niches coming along there is a PEO for everyone.

Tips for choosing a PEO:

  • Determine your business’s HR and risk management needs, and narrow your candidate list to PEOs that can meet them.
  • Ascertain the financial strength and security of the PEO candidate. Its financial statements should be independently audited by a CPA; risk management practices should be independently certified; and operational, financial, and ethical practices should be independently accredited.
  • Meet the people who will be serving you, and ask for client and professional references.
  • Understand the PEO’s benefits plan options. Analyze the PEO’s service and cost structures

Professional employer organizations (PEOs) offer a stunning array of potential benefits to small and midsize businesses (SMBs), especially those in growth mode. Research commissioned by the National Association of Professional Employer Organizations (NAPEO) documents that PEO clients grow faster, have lower rates of employee turnover, and have higher rates of business survival than their peers. Businesses that use a PEO gain a competitive advantage in attracting the best employees. Often, PEOs allow them to offer a higher level of benefits than they would be able to afford on their own. Most importantly, offloading responsibility for HR, payroll, benefits, workers’ compensation, and other administrative tasks to a PEO frees up leaders to focus more of their time and energy on their core competencies and strategic issues. “With a single stroke of the pen, the owner of a small or midsize business can dramatically improve the odds of his or her success,” says Richard G. Rawson, president of Houston-based Insperity. “That’s what a PEO does.” When a business signs on with a full-service PEO, it gains an “instantaneous HR infrastructure that provides a significant amount of administrative relief.”

Lack of awareness of PEOs The PEO model has been around for some 30 years, but for all PEOs have to offer, there is still a surprising lack of awareness about them among many businesses. NAPEO’s research shows that 14-16 percent of businesses with 10-99 employees currently partner with a PEO, but many more could benefit from doing so. “Raising awareness of PEOs and what they can do for growing businesses is our top priority at NAPEO,” says Pat Cleary, the association’s president and CEO. “Business owners who weren’t aware of PEOs are often astounded when they hear about the advantages PEOs can provide. So much so, in fact, that one of the first questions they often ask is, ‘Is it legal?’” Unlike other types of outsourced services providers, PEOs enter into a relationship called “co-employment” with their clients. Under that arrangement, employees work for both the client business and the PEO. As the co-employer, the PEO manages all personnel-related functions, such as wage and benefits administration, workers’ compensation, etc., filing under its own tax employee identification number (EIN). The client company maintains control of all business decisions and operations. That’s been a difficult concept for some business owners to grasp, but a recent development may help on that front. Beginning June 1 of this year, the IRS began issuing Certified Professional Employer Organization designations to PEOs that complete a certification process laid out in the Small Business Efficiency Act.


Continue reading the article here.

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