How a Professional Employer Organization Can Help Your Business Adapt

How a Professional Employer Organization Can Help Your Business Adapt

This article was updated on Sept. 10, 2018.

When you're running a small business, you want to position yourself to attract the best talent. Offering best-in-class benefits packages can help bring in strong performers; unfortunately, these programs can come at a high cost. As such, you might want to consider joining forces with a professional employer organization (PEO).

Here's a quick guide on how PEOs can benefit your workforce:

How a Professional Employer Organization Works

When you form a contractual relationship with a PEO, your employees become co-employed by your business and the PEO. As part of a contractual relationship, PEOs handle certain compliance, benefits, payroll and tax functions for its partner companies. Rather than developing these programs from scratch, you can plug into solutions that are already working for other organizations.

In essence, PEOs enable small businesses to become part of a larger organization for HR purposes. In exchange for paying a fee, small businesses can access many of the same HR services and benefits that larger organizations are able to afford. If a small business grows substantially and can bring these functions in-house, they can usually opt out of the PEO agreement and implement a new solution at the end of their contract term.

Additional Benefits

During business expansion, HR compliance can pose a major challenge. For example, small businesses with more than 50 full-time equivalent employees need to make sure that they abide by laws such as the Affordable Care Act (ACA). A PEO can streamline and automate these processes so you can focus on running your organization. In addition, PEOs can help ensure that your employees always have access to high-quality benefits packages, which can help make your company an attractive option for desirable candidates.

When you join forces with a PEO, your operations will remain independent from those of other companies with which they partner. As such, you will not be responsible for any employees outside of your own company.

Providing the Necessary Infrastructure

Small businesses can experience growth spurts at unexpected times. As such, your leadership team needs to work to ensure that your systems remain intact. A professional employer organization can provide the infrastructure that you need to keep your HR operations streamlined while simultaneously helping you minimize your liabilities. Rather than building a solution from scratch, you can join an established PEO. By utilizing a PEO to handle these business functions, you can focus on strengthening other areas of your organization.