If your business has as few as two employees, you may still benefit from acquiring the services of a PEO. After all, you have HR duties to carry out and need to comply with state and feder
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Did you ever wonder what a PEO broker is? How is it related to a PEO?
A PEO Broker is an individual or firm who represents and manages PEOs. PEOs, on the other hand, are organizations that lease employees to businesses, under an arrangement where they share and manage employee-related responsibilities and liabilities.
Do you think your business needs a PEO? PEO brokers conduct a free client's needs assessment, determine if you need a PEO, and then match you with a reliable and certified PEO.
A Professional Employee Organization or PEO is an outsourcing firm that helps you manage your payroll, employee benefits, and other HR responsibilities. PEOs typically partner with small- to medium-sized businesses with 5 to 500 employees.
Some PEOs have joined a voluntary program set by the Internal Revenue Service (IRS) that certifies them as having passed and maintained IRS standards. Being a Certified PEO (CPEO) means that a PEO is legally responsible for their client's employment taxes and compliance issues. Therefore, make sure to partner with a certified PEO.
PEOs provide services to 156,000-180,000 small and mid-size businesses, employing between 2.7 and 3.4 million people.
If your business has as few as two employees, you may still benefit from acquiring the services of a PEO. After all, you have HR duties to carry out and need to comply with state and federal laws. PEOs provide support in both of these areas.
Accounting firms to high-tech companies
Small manufacturers
Doctors
Retailers
Mechanics
Engineers
Plumbers
Nonprofit organizations
When you sign a Client Service Agreement with a PEO, you agree to divide the employer's responsibilities. This situation is called co-employment, where your employees are also considered PEO employees.
You maintain responsibilities for the worker’s job duties and day-to-day functions while the PEO manages HR-related functions. PEOs do not provide a workforce but they bestow industry-standard employee benefits, HR management, risk and compliance management, etc.
The biggest bonus with a co-employment connection is that your employers can grant access to Fortune 500 employee benefits that they would not have otherwise.
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Assess your workforce and risk management needs.
Make sure the PEO is competent in meeting your goals. Know the people you will be working with.
Ask for credit and professional references.
Confirm if the company is a member of NAPEO, the national trade association of the PEO industry.
Check if the PEO is IRS-certified.
Check if a CPA audits the PEO's financial statements.
Check if their risk management practices have been independently certified by a certification institute.
Check if their operational, financial, and ethical practices have accreditation by Employer Services Assurance Corporation (ESAC).
Scrutinize the company's administrative and management prowess and knowledge. What experience and thoroughness does their internal staff have? Does the PEO corporate staffing allotment follow the preferences of the PEO's marketed services? Does their senior staff have professional schooling or designations?
How are its employee benefits funded? Is the PEO fully secured or partially self-funded? Who is the third-party administrator (TPA) or carrier? Is their TPA or carrier allowed to do business in your state?
Know how the employee benefits are adapted. Find out if they fit the needs of your employees.
Read the service agreement conscientiously. Are the concerned parties' responsibilities and liabilities laid out? What guarantees are available? What benefits permit you or the PEO to cancel the contract terms?
Ensure that the company you are choosing meets all state requirements.
PEOs help your business lower your overall risk in the following areas:
Employer Liability Management
They bring your company into compliance with applicable laws.
Risk Consultancy
They provide strategies for lowering workers' compensation claims and safety issues.
Employee Administration
They develop workplace standards and handbooks, including harassment policies.
Related Topic: Beginners Guide To PEO Brokers - FAQs
PEO fees can differ, but they typically charge based on the number of employees you have and which services you are using.
A percentage of payroll. Rates can vary depending on the magnitude of your organization. Generally, expect anywhere from 2% to 12% of payroll.
Flat fee per employee every month. Many organizations prefer this because it does not tie PEO costs to employee compensation. The price will vary substantially depending on your organization.
According to a recent study by noted economists Laurie Bassi and Dan McMurrer, businesses that use PEOs grow 7 to 9 percent faster, have 10 to 14 percent lower employee turnover, and are 50 percent less likely to go out of business.
Businesses become more productive and profitable with PEOs alongside because PEOs take care of the paperwork and provide regulatory compliance assistance. Hence, as a business owner, you will be able to focus more on your core mission if you get a PEO to help you.
Frequently, a PEO arrangement is the only opportunity for a worker in a small business to receive benefits.
1. Access to FORTUNE 500 BENEFITS
Through a PEO, employees of small businesses gain access to benefits such as:
health insurance
dental and vision care
life insurance
retirement savings plans
job counseling
adoption assistance
educational benefits
even pet insurance
2. Increased participation in RETIREMENT SAVINGS PLAN
3. Assistance from HUMAN RESOURCE PROFESSIONALS
Almost all PEOs provide access to human resource professionals as a part of their services.
Through this service, PEOs help your business comply with numerous federal, state, and local employment laws. They also help your employees better understand their rights and responsibilities.
Employment taxes
CPEO will submit your employment taxes to the IRS under its Employer Identification Number (EIN)
Tax credits
You can claim small businesses tax credits
Lower withholdings
Tax liability
Should your CPEO fail to remit the appropriate taxes, the IRS will not go after your company.
PEOs exist to streamline the human resources outsourcing process. It is easier than ever to find the best fit PEO for your business with the help of a PEO Broker. Even small businesses can benefit from a partnership with a PEO.
Call your PEO Broker today. Start the partnership and enjoy a more positive experience for you and your employees!
Having built something from the ground up, invested a considerable amount of your life in it, and leaving it behind is a monumental decision.
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