Making Sense of PEO Services

What does a PEO do?

A professional employer organization (PEO) provides HR services to organizations, with a focus on small and mid-sized businesses. The meaning of a PEO — its primary purpose — is to provide back-office administration help for companies that lack the resources or in-house expertise to manage HR on their own. And PEOs help you ensure your employees are being taken care of, freeing up your time for core operations.

Working with a PEO can also give you access to better resources for your employees, such as health insurance plans and ancillary benefits options. Many PEOs also come with a wealth of knowledge in HR regulations and risk management, so you can lean on their expertise to give proper attention around workplace compliance and employee safety.

As a growing business, you likely need help maintaining HR functions, but rather than hiring one or more dedicated HR employees, you can partner with a PEO. The HR solutions provided by PEOs include (but are not limited to):

• HR management
• Payroll administration
• Employee benefits administration
• Workers’ compensation and claims assistance
• Assistance with HR compliance
  

You can entrust these services, among others, to a PEO through an arrangement known as co-employment.

G&A Partners’ chief revenue officer John G. Allen explains that in this model, “you maintain full control over your company, managing day-to-day employment decisions and operations, and the PEO becomes your administrative employer, handling HR functions such as payroll, benefits, and workers’ compensation insurance.” It’s worth noting that co-employment does not mean your employees now work for the PEO; instead, the PEO simply performs the requested services on your behalf.

For your employees, the day-to-day experience of their job will likely not change much (if at all) when you partner with a PEO. Co-employment is the sharing of employer responsibilities, but not the sharing of employment. You still retain control over your employees and make the final decisions over what your business offers and how you run operations.

Think of a PEO as a trusted advisor: a team of HR professionals with the expertise you need and the resources you want, all at a price you can afford. Some PEOs like G&A offer comprehensive, flexible packages, allowing you and the PEO to create a dynamic partnership that fits the needs of your business. It’s important to note that not all PEOs offer this same amount of flexibility, coverage, or best-in-class customer service. At G&A, our experts will help you understand your options and select the best PEO services for your business.

What are PEO services?

Most employee-related services fall under the umbrella of a PEO. HR management, payroll, benefits administration, onboarding/offboarding employees, and even employee development are all HR services a PEO provides. But working with a PEO is not just about keeping things afloat; it can also be a way to promote expansion and new business opportunities.

You didn’t start your company to be bogged down managing administrative responsibilities – and that’s where a PEO can help. By utilizing PEO services, you can offload time-consuming, complex HR administrative tasks and focus on core operations, allowing for more growth and innovation throughout your organization.

PEOs also provide you with deep expertise and knowledge around workplace regulations. Managing HR responsibilities requires being up to date with hundreds of local, state, and federal regulations that are constantly changing. Staying abreast of these changes is a tall order when you’re also running a business, but to protect your company, you may need to lean on HR experts who know the ins and outs of compliance. Organizations like G&A Partners stay on top of evolving HR regulations, so you can focus on revenue-generating efforts.

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What is a PEO payroll service?

A PEO payroll service includes all the functionality of payroll administered through your PEO. While PEO services as a whole are largely the same as those offered through standalone services, working with a PEO can take on many forms depending on what services you need help with.

For example, having a PEO handle your payroll administration can:

• Give you access to HR technologies to streamline payroll processes
• Reduce payroll errors
• Ensure employees are paid on time
• Provide detailed payroll
• Mitigate compliance risks with access to expert payroll advice
  

Ultimately, better payroll administration will build trust with your employees, create efficient workflows, and help maintain compliance with shifting regulations. All of these benefits contribute to increased employee satisfaction and a positive workplace culture.

What are the negatives of a PEO?

Some of the perceived negatives of partnering with a PEO stem from myths surrounding professional employer organizations.

Two common PEO myths center around control:

• Who controls the employees?
• Who is responsible for HR compliance when a small or mid-sized business works with a PEO?

Often, business owners express concern that a PEO will take control of their employees in a co-employment agreement. This is not true. Employee management, business decisions, and day-to-day operations are examples of what is not included in PEO services. A PEO can help by offering more resources and expertise, but they do not make business decisions for you or supervise your employees.

Another common myth is that a PEO is responsible for your HR compliance. The reality is, you share liability with a PEO for employment-related matters, but ultimately, you are responsible for your HR compliance. While PEOs can offer recommendations and help identify where you’re at risk for noncompliance, your business is responsible for maintaining HR compliance and following regulations.

Partnering with a top PEO company allows you to offload time-consuming and often confusing HR responsibilities. However, the key to establishing a successful arrangement and avoiding any potential pitfalls is to find the best PEO partner for your business – an organization that aligns with your company values, is responsive to the unique needs of your business, and is invested in your long-term success.

Why do companies use a PEO?

In addition to HR administrative support and payroll administration, three of the main reasons small and mid-sized companies choose to work with a PEO include:

1. Access to high-quality, affordable employee benefits
When negotiating rates for medical insurance and other benefits, PEOs can leverage their purchasing power to secure better rates and higher-quality plans for you and your employees.

2. Improved employee recruitment and retention
The right PEO can help you improve your recruitment and retention efforts, so you can compete with larger companies for the best employees. In fact, the National Association of Professional Employer Organizations (NAPEO) found in a 2019 study that turnover is nearly 20% lower for companies that utilize a PEO.

3. Protection against costly penalties for noncompliance
A PEO with comprehensive regulatory expertise, like G&A Partners, can help your small businesses stay compliant with laws and regulations that impact you due to your business structure, industry, or location.

Businesses, just like yours, use a PEO because this arrangement provides a more comprehensive solution than other HR providers. And, in addition, Forbes reports that businesses that use a PEO are:

• Approximately 50% less likely to fail
• Grow faster than businesses that don’t use PEOs
• Can reduce the basic costs of workers’ compensation by as much as 25%
• Have lower employee turnover

What companies use PEO services?

Any organization that needs help with multiple HR functions can benefit from working with a PEO, especially if you have limited time and resources. Using a PEO for a small business can be a game-changer. As a business owner, you may find yourself inundated with running your organization rather than growing it. What once was a career that filled you with passion and drive, can become consumed by important but time-consuming HR tasks, such as payroll, benefits administration, recruiting new employees, and staying on top of workplace compliance. This, among many other reasons, is why over 200,000 small businesses seek help from a PEO for HR management needs. If you’re a small-business owner who’s in need of expert HR advice, help with employee-related operations, or access to better benefits for your staff, a PEO may be the partner you need to get your business to the next level.

Want to learn more about PEO consulting services?

Good news, you don’t have to sort through a list of PEO companies to find helpful information. You’re in the right place. Explore our comprehensive resource library to find everything from the latest HR industry news and tips to in-depth guides. We’ve compiled over 25 years of experience into one education resource center — so you can find what you need when you need it.