Full-Service HR

Answers to Common PEO Questions

Ella Baker
Answers to Your PEO Questions
Reading time 4 Mins
Published on Feb 5

Working with a professional employer organization (PEO) provides many benefits for small and medium-sized businesses across all industries. To make the most of the PEO-client relationship, it’s important for SMB owners and managers to know as much as possible about their PEO and how the relationship works. Here are the answers to your biggest PEO questions.

What exactly is a PEO?

A PEO provides outsourced human resource services to small and mid-sized businesses (SMBs). These services often include HR administration, recruiting, payroll, W-2 processing, employee benefits, and more.

What does co-employment mean?

PEOs and their clients work together in a co-employment relationship. For the purposes of taxes and compliance, the PEO is the employer of record for your employees, but you retain all oversight of your staff.

The co-employment model offers SMBs a streamlined model that can boost productivity and morale while removing much of the hassle of dealing with the abundance of paperwork and compliance issues. According to the National Association of Professional Employer Organizations (NAPEO), 98% of all businesses who use a PEO recommend them to others. Check out How the Co-Employment Model Really Works to learn more about how partnering with a PEO allows you to retain control of your business while taking much of the stress off your shoulders.

Is a PEO the right choice for my company?

When it comes to using a PEO, there’s no such thing as a business that’s too small. In fact, SMBs typically benefit more from the PEO relationship than large companies.

While any business may choose to utilize their services, PEOs usually partner with companies that employ between 25 and 250 staff members. They work with companies across many different industries, including manufacturing, construction, and traditional office-based businesses. Small business owners who have to juggle the concerns of growing their business, managing client expectations, and staying compliant with HR regulations can benefit most from working with a PEO partner. Read the Rise of Small Businesses Using PEOs to learn why more small businesses than ever are choosing to work with a PEO.

How can working with a PEO help my company?

Working with a PEO provides a wide range of benefits for companies. For SMB owners and managers juggling employment issues while trying to grow the business, working with a PEO can be the difference between continued success and folding early. Here are just a few of the benefits that a PEO can offer.

  • Focus on growth
    Working with a PEO allows managers and owners to focus on growing the business. Instead of worrying about payroll processing, benefits administration, and HR compliance issues, SMBs that partner with a PEO can spend more of their time on revenue-producing tasks that help make the business more successful. In fact, NAPEO reports that SMBs who work with a PEO experience 7-9% faster growth than those who don’t.
  • Reduce benefit costs
    For many SMBs, the cost of providing health insurance, retirement, and other benefits can be out of reach. Since PEOs are the employer of record for thousands of employees across a number of industries, they can use their collective buying power to negotiate lower fees and rates on benefits from insurance companies and other providers. This buying power can mean as much as a 35% lower rate on the most common benefits.
  • Manage compliance
    Employment-related law is constantly changing. Staying up to date with new and ever-evolving regulations can be a full-time job for even the most experienced HR expert. When the task of staying compliant falls to an HR generalist or manager with little experience, disaster can be just around the corner. With a PEO partner, SMBs can rest assured that their HR operations are in capable hands and that their company is remaining compliant.

Solutions that keep you ahead of the competition

Accredited by the Employer Services Assurance Corporation (ESAC) and Certification Institute and backed by a $3 million Employment Practices Liability Insurance policy, Sheakley’s 120 years of combined PEO experience and expertise are unrivaled in the industry. Even if you already have an in-house HR team, Sheakley’s PEO experts have the skills and expertise to deliver top-notch human resource solutions to meet the needs of your company.

Schedule your free consultation with a Sheakley PEO professional today. For more in-depth information about PEOs, download our What is a PEO e-book. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media. Join the discussion by commenting below.

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