Running a small business requires a great deal of ingenuity and determination. As the owner or a key decision-maker in your company, you wear multiple hats – and you work hard, every day, to juggle it all. But as your company grows, staying on top of mounting HR responsibilities – such as payroll, benefits, compliance, and employee relations – can become a real challenge. It also takes valuable time and resources away from building your business and serving your customers.
Each year, a growing number of small-business owners are choosing to outsource their HR with a PEO to alleviate the burden of HR management and unlock significant growth potential. So, what is a PEO and how can it help your small business? And is a PEO a good idea for your unique needs?
In this article, we’ll lay out the benefits of a PEO (professional employer organization) for your small business and help you decide if this type of HR outsourcing partnership is the right fit for your company.
Why should a small business use a PEO?
For smaller businesses, the value of a PEO goes beyond just streamlining HR tasks. It's also about unlocking operational efficiency, attracting top talent, and propelling growth. However, like any business decision, it’s important to identify your specific needs and priorities—to find a partner that best fits you (and your company’s) needs.
For a small business, PEO benefits can be a game changer. But how do you know if it’s the right time to outsource your HR with a PEO? Consider these key factors:
- Business growth: If your small business is experiencing rapid growth or expansion, it may be the right time to consider partnering with a PEO. As your workforce grows, managing HR tasks such as payroll, benefits administration, and compliance becomes increasingly complex, and a PEO can provide the necessary support and scalability.
- HR challenges: If your small business is struggling to effectively manage HR tasks, such as keeping up with changing employment laws, handling payroll processing errors, or administering employee benefits, a PEO can alleviate these challenges and help ensure compliance.
- Employee benefits needs: If you want to offer competitive employee benefits, such as health insurance, retirement plans, and other perks, but lack the resources or bargaining power to negotiate affordable rates, a PEO can provide access to competitive and cost-effective benefits options through their collective purchasing power.
- Time constraints: If you find yourself spending too much time on HR administrative tasks rather than focusing on growing your business and serving customers, partnering with a PEO can help free up your time and resources.
- Focus on core business: If you want to streamline operations and focus on core business objectives, a PEO can enable you to offload administrative burdens and concentrate on strategic initiatives.
Ultimately, the decision to partner with a PEO should align with your business goals, needs, and readiness for outsourcing HR functions to a trusted third-party provider. Evaluating these factors can help you determine if it's the right time to engage with a PEO.
What are the benefits of a PEO for small businesses?
If you’re seeking to streamline HR operations and enhance employee satisfaction, the benefits of a PEO for small businesses are numerous. Partnering with a PEO provides you with more than administrative relief, it helps to unlock important advantages for your small business, including:
- Expert HR support: Gain access to a team of HR professionals who provide expert guidance and support on various HR matters, including compliance, employee relations, and best practices.
- Potential cost savings: Reduce HR administrative costs by outsourcing tasks such as payroll processing, benefits administration, and compliance management to a PEO, which leverages economies of scale to negotiate better rates and terms.
- Affordable, Fortune 500-level benefits: Due to a PEO's collective bargaining power, you can offer competitive employee benefits packages such as health insurance, retirement plans, and other perks – typically available only to larger companies.
- Time efficiency: Save time and resources when you transfer time-consuming HR tasks to your PEO – allowing you to focus on core business activities and strategic initiatives.
- Maintain legal compliance: A PEO can help you stay up-to-date with changing employment laws and regulations, helping to maintain compliance with state and federal HR requirements and reducing the risk of costly penalties and legal issues.
- Risk management: PEOs share certain employer responsibilities, such as workers' compensation insurance and unemployment claims management. This helps mitigate risks associated with HR-related liabilities, providing your business with greater financial security and peace of mind.
- Scalability: Scale your HR operations seamlessly as your business grows, with the flexibility to adapt to changing workforce needs and requirements.
- Employee satisfaction: Improve employee satisfaction and engagement by providing access to professional HR support, comprehensive benefits, and streamlined HR processes facilitated by the PEO.
- Access to technology: PEOs, like G&A, provide access to advanced HR technology platforms for tasks like employee onboarding, time tracking, and benefits enrollment. This technology can streamline processes, improve accuracy, and enhance the overall employee experience.
By harnessing the expertise, resources, and support provided by a PEO, you can optimize your HR operations, minimize risks, and create a positive work environment for current (and future) employees.
Do PEOs provide employee benefits for small businesses?
Yes, as noted in the above sections, PEOs are a major asset for small businesses seeking to offer competitive employee benefits packages. While you technically remain the employer, PEOs co-employ your workers, allowing them to leverage their buying power to negotiate significantly better rates on health insurance, dental plans, and other benefits.
This enables small businesses to compete with larger companies in attracting and retaining top talent by offering a wider range of attractive benefits packages that might not be readily available on their own. Overall, PEOs can significantly enhance your small business employee benefits package, while also managing your benefits administration.
What size company should use a PEO?
While PEOs can technically partner with businesses of any size, they tend to be a particularly good fit for small and mid-sized businesses (SMBs) with roughly 5 to 500 employees. Companies within this range often lack the dedicated HR staff and resources to manage complex HR tasks efficiently, and PEO services can alleviate this burden by handling payroll, benefits administration, compliance, and more – freeing up valuable time and resources for you to focus on core business functions.
Additionally, a PEO can help you compete with larger companies in attracting and retaining talent by offering access to a wider range of benefits at potentially lower costs. So, if you feel overwhelmed by HR tasks and you just want to get back to doing what you do best, working with a PEO like G&A – with comprehensive HR services and expertise and best-in-class client service – can help you get there.
How G&A Can Help
G&A Partners offers access to HR experts with years of experience helping businesses develop their employees, improve their workplace cultures, implement new HR processes and procedures, and more. Schedule a consultation with one of our trusted business advisors to learn more.
