- Professional Employer Organizations (PEOs) are strategic partners for small and mid-sized businesses looking to reduce the workload of their internal HR teams.
- By delegating tedious tasks like payroll, taxes, and compliance, teams can save time, reduce errors, and focus on core business goals.
- CertiPay offers first-class HR solutions, including PEO services, to support businesses with payroll & HR administration tasks. Learn how we can help!
Small business owners know that managing their workforce effectively is crucial — but rather time-consuming. From processing payroll and keeping up with taxes every month to staying compliant with ever-evolving labor and safety requirements, there’s just too much for a small HR team to handle. But PEOs can ease the burden.
PEO stands for Professional Employer Organization. Essentially, a PEO is a dedicated partner that supports your internal team by taking over non-core HR tasks — like payroll and benefits administration — so you can focus on your business growth.
Read on to learn the basics of PEOs and how they can help small and mid-sized businesses be more efficient and productive.
Let’s jump right in!
What Is PEO? – PEO Meaning
A Professional Employer Organization is an HR outsourcing solution in which an external company acts as a strategic partner assuming responsibility for HR tasks like payroll processing, tax compliance, and employee benefits administration.
By engaging in a co-employment relationship with a PEO, small and medium-sized businesses can take advantage of the expertise and infrastructure of the PEO to handle daily HR activities, while having more time available to focus on strategic initiatives with a higher impact.
Types of PEOs
Employers often find themselves puzzled by the business model of PEOs, even though there’s only one type of co-employment. However, the services offered by PEOs can vary from one to another.
For instance, some PEOs are tailored to suit global businesses and can act as Employers of Record (EOR), taking all the responsibilities of a local employer to enable businesses to hire employees across borders legally.
Other PEOs specialize in serving specific industries, such as healthcare, technology, or hospitality. These industry-specific PEOs have expertise in the unique challenges and regulations that businesses in particular sectors may face.
What a PEO Doesn’t Do
One of the myths about PEOs is that they are meant to replace your internal HR team. But rather than replacing them, a PEO collaborates with your team, providing support and sharing valuable insights into complex HR situations.
What is the fine line that separates their responsibilities from yours? Let’s clarify what PEOs don’t do.
- Strategic decision-making. PEOs focus on administrative HR functions and compliance, but they typically don’t participate in your business strategy, long-term planning, and company culture development.
- Direct supervision of employees. Although PEOs assist with HR management, they don’t directly supervise the day-to-day work of your employees. Employee supervision, task assignment, and performance evaluations fall under your scope.
- Recruitment and talent acquisition. While PEOs may assist with aspects of the hiring process, such as background checks and compliance, they typically don’t engage in full-scale recruitment or talent acquisition. In other words: finding the right talent is still up to you!
- Employee training and development. While PEOs may provide certain training resources, they don’t take on the role of designing and implementing comprehensive employee training and development programs.
Why Use a PEO? – PEO Benefits
Regardless of your business size and industry, delegating the most time-consuming HR tasks to an experienced partner can be a game-changer.
“Businesses that use PEOs grow 7 to 9 percent faster, have employee turnover that is 10 to 14 percent lower.”
— McBassi & Company.
Here are some of the key benefits of partnering with a PEO:
1. Gain Access to a Suite of Comprehensive HR services
PEOs provide a wide range of HR services, including:
- Payroll processing
- Benefits administration
- Compliance management
- Risk mitigation
- Human resource support
By outsourcing the HR tasks that demand more time and resources from your team, they can be more available to focus on more strategic, revenue-generating initiatives.
2. Reduce Errors and Improve Efficiency During Payroll Processing
Payroll involves various tasks: You need to calculate wages and benefits contributions, withhold taxes, and keep track of employees’ work hours and attendance.
By bringing in the expertise and dedicated software of a PEO, you can reduce errors in payroll processing, ensuring all your employees get paid accurately and on time.
Additionally, as PEOs do more than just process payroll, you can be sure that your entire processes become more efficient.
3. Access to Competitive Employee Benefits
With healthcare costs on the rise, small and mid-sized businesses are having a hard time trying to negotiate attractive insurance benefits for their employees.
Average annual health insurance premiums in 2023 are $8,435 for single coverage and $23,968 for family coverage.
However, PEOs can leverage their collective client base to offer access to competitive employee benefits, including health insurance, retirement plans, and other perks.
By joining forces with a PEO, SMBs can provide their employees with benefits comparable to those larger corporations offer.
4. Get Compliance Assistance from a Team of Experts
Staying compliant with ever-changing employment laws and regulations can be challenging. Employment laws and regulations are complex and can vary at federal, state, and local levels.
PEOs specialize in HR compliance and can help your business navigate complex legal requirements, reducing the risk of penalties and lawsuits, and avoiding the hefty costs of non-compliance.
In addition, PEOs can play a crucial role in assisting your business with Affordable Care Act (ACA) compliance, from eligibility and data collection to reporting.
5. Improve Risk Mitigation Strategies
PEOs share some risks with your business as part of the co-employment agreement. This includes handling workers’ compensation, unemployment claims, and legal disputes.
The PEO’s expertise can help mitigate risks and ensure you always stay compliant with labor laws.
CertiPay’s PEO: Relief from Payroll and HR Administration Overload
For SMBs with limited resources and a smaller HR team, managing human resources, payroll, and compliance can be quite overwhelming.
Coping with endless administrative tasks makes HR professionals lose precious time, resources, and talent that could otherwise be channeled toward vital business operations.
CertiPay’s PEO services reduce your team’s overload by taking over the boring HR administrative tasks and allowing you to focus on the things that drive business growth.
Benefits of CertiPay’s PEO
Here are three reasons to choose CertiPay as a dedicated partner:
- Get a strategic partner that knows your business. With a personalized approach, we deliver flexible solutions that fit your business needs and goals.
- Run your business with the latest HR technology. Since we produce our own software, we can tailor our tools to meet your specific business requirements.
- Support your internal HR team throughout the entire employment life cycle. Ease the pressure on your small team by allowing experts to handle the most time-consuming administrative tasks, from payroll to ACA compliance.
PEOs Final Thoughts
There’s only so much your small HR team can handle. However, by partnering with a PEO, you can tap into a wealth of expertise and ensure that key areas in your business, such as payroll, compliance, and employee benefits, are operating seamlessly.
CertiPay provides first-class HR solutions to help small and mid-sized businesses handle various HR administrative tasks, from navigating compliance issues to keeping a safe workplace.
Contact us to find out how you can expand your HR capacities with our PEO services!