If you’re looking to outsource your human resources, your search results might be highlighting some professional employer organizations. But what are PEO services?

As a trusted provider of these types of PEO solutions, Union Risk Services unpacks these important roleplayers below so that you can streamline your business’s employment strategy.

What Is a Professional Employer Organization?

PEOs provide a service to help small businesses with all sorts of employment matters. You enter a process known as co-employment PEO, meaning the professional employer organization will share certain responsibilities with you via a contract.

For example, PEO outsourcing can include the following tasks:

Payroll and Benefits

Streamlining your payroll process boosts employee satisfaction, but what does your business need to do to pay your employees on time? PEO services could help you with everything, from scheduling automatic payments and dealing with taxes to paying independent contractors.

The PEO can also handle employee benefits as part of payroll, from 401k contributions to tracking paid time off. If you take this route, you’ll likely join other small businesses in a “benefits pool” so that you can all leverage better medical and dental benefits for employees.

Compliance and Support

Human Resources has compliance requirements, many of which require extensive paperwork. Include the following services as part of a PEO service:

• Report new hires through the appropriate channels.
• Ensure employment-related liability insurance coverage and workers’ compensation claims.
• Do W-2, 1099, and payroll tax filings.
• File for unemployment insurance.

Additional Services

What are PEO services? Often, PEO services will include additional services exempt from traditional benefits. For example, modern contracts may include provisions for mental health, family planning, and compensation for commuting, all of which a PEO provider can cover by grouping small businesses to leverage economies of scale.

How a PEO Benefits Your Business

Now that you have a PEO overview, you can start understanding the benefits of PEO input, such as:

Reduced Cost of Employee Benefits

When a small business provides insurance to their employees, one or two workers in poor health can drive up the cost for everyone. Affordable health insurance depends on a large number of people. That way, healthy workers can affordably subsidize the care of employees who need more frequent care.

By pooling your employees with another member of the co-employment contract, a PEO helps you spread costs among thousands. You can offer your workers medical benefits much more affordably than you would as a single entity.

Support for Remote Teams

In a world of pandemics and AI, businesses are recognizing the various benefits of remote work in a broader sense. Your PEO could provide better support for your company’s remote workers, including easily navigating compliance across state jurisdictions and employees scattered across the country.

The trends indicate that remote workers sometimes feel disconnected or less valued than in-person employees, which is understandable without daily in-person contact. A PEO could refer workers to local resources like in-network doctors and mental health professionals and find other ways to help your workforce feel cared for, no matter their location.

Fewer Hiring Expenses

So, what are PEO services? They are part of a contract that, at its core, aims to reduce your hiring expenses. Your provider will roll in the cost of paperwork and onboarding expenses into the contract’s monthly payment.

One big benefit is that you’ll no longer feel like you have to delay hiring someone new until you have the costs or time available for meaningful recruitment. Your PEO service provider will take care of it.

Enhanced Risk Protection

A PEO significantly reduces the risks small businesses under 200 people encounter. Say goodbye to those yearly fines for overlooking payroll details or other compliance issues.

While a PEO can’t file every piece of paperwork for you, their support is invaluable. What you spend on PEO services, you may save on avoiding penalties.

Increased Employee Productivity

Why outsource much of your human resources activities?

• You free up your managers to lead, grow, and add value.
• You lighten your administration burden across the board.
• You free up employees to use their gifts and skills for the business, not paperwork.

When your people aren’t stuck at a desk filling out employment paperwork, your brightest minds can build valuable relationships and strategically grow your business.

Services Not Included in a PEO

What are PEO services not going to include? Usually, your PEO contract doesn’t enable the co-employer to do the following:

• Take over your daily operations
• Implement safety procedures
• Choose who you bring onto your team or fire
• Serve as legal or tax advisors for crucial business decisions

While they streamline the hiring process, specialize in compliance, and file paperwork, PEOs can’t displace your responsibilities. However, you can expect to feel well-equipped for compliance and processes with the PEO provider giving you vital information and tools.

Finding the Right PEO Provider

How can you find a reputable and effective PEO provider? Follow these tips:

• Accreditation: Only work with a PEO provider accredited with the Employer Services Assurance Corporation. These companies won’t take advantage of you.
• In-house staff: Some PEOs function as go-betweens and outsource their HR services to another company. Only partner with a provider with an experienced in-house human resources team.
• Clear contract: Your PEO should include a clear contract. For every service they provide, an itemized list of costs should be there from the beginning.
• Strong reputation: Research the company’s percentage of satisfied customers and read third-party reviews (not only those on the company’s website).

Can the potential PEO provider give you a live demonstration of their services and technological capabilities? A reputable company doesn’t hide what they can do for you.

Schedule PEO Services With Union Risk Services Today

What are PEO services? Are full-time temporary employees eligible for benefits? Are PEO services a good fit for your small business?

At Union Risk Services, we can answer all of these questions and any others that come up about Professional Employer Organization matters. Call 718-370-3131 to schedule a consultation today! We serve the Union, New Jersey, area, and beyond.