Full-Service HR

Three things every small business owner needs to know about PEOs.

Amanda Hagerty
Reading time 3 Mins
Published on Oct 13

As a business owner, you’ve likely already found out that as your business has grown, you’ve been in the “business of employment” rather than focusing your time and energy on  what you opened your business to do. You’re constantly put in a position where you have to choose between doing what’s needed for compliance or dedicating your time to clients and letting compliance and benefits fall by the wayside. When you see this happening, a Professional Employer Organization (PEO) could be a good option for you. Here are three things you should know about PEOs.

  1. What does a PEO do?
    A PEO provides comprehensive Human Resources (HR) service solutions for businesses. While the exact mix of services may vary, you can expect payroll, benefits, tax administration, and regulatory compliance assistance. This means they do all the administrative, paper-pushing, form filing, “the government requires what?!?!” and “I don’t have time to deal with this” stuff.
  1. Why should I care about PEOs?
    If you didn’t go into the HR business, and you want to grow your business, you should care because what you don’t know can hurt your business. Most owners simply do not have the necessary human resource training, payroll and accounting skills, knowledge of regulatory compliance, or a background in risk management, insurance, and employee benefit programs to meet the demands of being an employer.PEOs fill this knowledge gap and let you focus on growing your business. As an employer today, you face more laws and regulations than ever before. A PEO can provide the assurance that you won’t be blindsided with fines or penalties for a compliance issue. For example, each violation on an I-9, the form that confirms each employee is allowed to work in the US, can range from $110 to $1,100 for each mistake or missing item on a form.
  1. What makes a PEO better than any other payroll or HR vendor?The added value with a PEO is the shared liability for compliance issues. Under a PEO, taxes and employer liability becomes shared between the PEO and the client. This means the PEO has “skin in the game” when providing service. If you look at the fine print of a payroll report, it says something like , “The employer is ultimately responsible for the payment and tax liability even if a third party payroll vendor is making the deposits.” Even if they make a mistake, you are solely responsible.

Download our whitepaper, PEOs; What is a PEO? And how can my business benefit from joining one? to learn about the PEO industry, why more businesses are choosing to hire PEOs, and discover if this option is worth looking into further for your business.

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