3 Reasons Small Business Owners Outsource Compliance to PEOs

Young businesswoman smiling

Compliance can be a headache for small business owners and executives. A PEO can help.

Small business owners follow their passion and launch their businesses, often not realizing just how much their dream might grow. But few predict how complex their businesses can become within a few years, which is why some turn to a professional services organization (PEO).

PEOs offer invaluable assistance with payroll, benefits and other HR services. They can be especially helpful with compliance, which is one of the most specialized and complex aspects of running a business. These requirements can vary across industries, geographic locations and roles — and they also come with serious consequences if they're not met.

Here are three critical advantages small businesses can gain when they opt to outsource compliance with a PEO solution.

1. Manage Complexity

One of the most stressful aspects of remaining compliant is that requirements can change quickly and at different levels of local, state and federal government. Working with a PEO allows small business owners to move forward with business as usual, knowing their outsourced compliance partner will keep them updated on what's changing.

Cindy Jacuk, CFO of Make-Up Designory, a trade school for makeup artists, operates in New York, California, Florida and Nevada — and compliance can become complex.

"One of our biggest concerns was whether or not we were truly in compliance with the four states that we're in," says Jacuk. "The laws we operate under grow exponentially and change quickly. We had to find a partner with the experience and expertise to know those laws both at the federal level and in four states."

2. Grow Multi-state Business

Doing business across state borders can be complicated. Businesses operating in one state with employees who live in another can fall under different compliance requirements in order to operate legally.

"Working with a PEO has allowed us to do more than we ever could alone," says Jacuk, who partners with ADP TotalSource®. "Before, we could basically offer a PPO to employees living outside California, and now we're a small business that can offer Fortune 500 benefits to employees no matter where they live.

"Just as important, though, is that they take as much time as necessary to help the employees understand what they're going through, whether it would be through open enrollment, if they're going on a leave, and what do they need to deal with and what's the process. I've received nothing but fabulous feedback about our advisors and our employees' experience with them."

3. Gain Peace of Mind

Organizations often opt to outsource compliance to achieve peace of mind in areas where the business owners don't specialize such as payroll, benefits, regulations and changes in the industry. Working with a PEO partner gives small business owners the confidence that, even though HR and compliance is not their area of expertise, they have their bases covered.

As a result, owners and operators can focus on running and growing the business, knowing that a trusted partner is helping to look out for their compliance needs.

"When you're in small business, you kind of get your blinders on looking at the situation in front of you," says Dr. Jonathan Cargo, owner of Cargo Eye Care in Las Colinas, Texas, who also partners with ADP TotalSource. "Having access to our PEO partner's perspective of how things work in other industries and companies gives us peace of mind because I know that, from an HR perspective, I'm not making mistakes as we grow."

The role of a PEO is to take on the complexity of compliance, benefits and HR functions and empower small business owners to focus on what they do best: operating the business. By understanding the unique details of your business's compliance needs and assisting with the stress, paperwork and diligence of staying on top of those details, a trusted PEO partner frees leadership to maintain optimism, grow the business and create value for customers, employees and owners alike.

Learn more by launching this virtual session anytime, HR Outsourcing: The New Front Line.