Health insurance can be an integral component of recruiting and retaining top talent, so working with a PEO to offer competitive group health coverage can save time, money and hassle.
PEOs create master health insurance plans by pooling employees from different small businesses together and using this leverage to negotiate rates typically reserved for larger organizations.
What is a PEO?
Are You Searching for Employee Administration Solutions? A Professional Employer Organization, or PEO, could be an ideal option. However, it is essential to fully comprehend their services before determining if a PEO is right for your company. PEOs are organizations which provide employer responsibilities like payroll processing, taxes and human resource administration in exchange for payment from clients; through co-employment they hire employee(s). In exchange, clients pay fees to PEOs in return for these services provided to them.
PEOs often offer more cost-effective employee benefits than individual businesses can, because they have access to numerous insurance providers who can be leveraged into negotiating rates for them on behalf of multiple businesses. PEOs may even provide access to special perks such as free gym memberships or commuter benefits.
PEOs can help save your business time and effort by taking over compliance with labor laws like equal employment opportunity (EEO) and wage and hour standards. They may also help avoid legal problems by sharing liability for employee lawsuits against your company – thus decreasing legal settlement risks and costs.
An elite PEO will be certified by Employer Services Assurance Corporation (ESAC), providing accreditation that confirms their reliability and financial stability. They may also have been licensed by the Internal Revenue Service to delegate tax responsibilities such as remitting withheld amounts and filing annual returns.
Before selecting a Professional Employer Organization (PEO), be sure to interview several candidates. Ask about their history, dispute management processes and type of technology they utilize for HR management; ask for a demo of their tech platform for yourself so you can see how it functions. Choosing a PEO should make HR simple while increasing efficiency so you can focus on expanding your business without distraction.
How do PEOs help you?
PEOs make managing all employer responsibilities much simpler for businesses. From payroll and workers’ comp to employee benefits and more, a PEO provider can save business owners both time and money by taking care of it all from one convenient source.
PEOs can help companies save money by providing their clients with access to cheaper health insurance plans through pooling. Pooling allows PEOs to negotiate better rates than small and midsized businesses would on their own, giving employees more options when selecting plans.
Many PEOs offer additional perks to their clients, such as commuter benefits, on-demand primary care and mental health support services that add value for employees as well as helping businesses create workplace environments that attract top talent.
Costly considerations associated with PEOs usually revolve around charging a monthly percentage-based fee based on payroll total. Typical charges range from 3 percent to 12 percent of total payroll every month and usually include workers’ compensation insurance, employer practice liability coverage and local, state and federal taxes as part of this charge. Fees associated with growing businesses can become increasingly burdensome quickly.
Small and mid-sized companies might not be able to afford professional employer organizations (PEOs), so they opt to handle payroll and HR themselves, which may cause confusion and difficulties when paying employees. A PEO can make the process smoother by offering dedicated support for employee payments on time.
PEOs offer small and midsized companies another service they need, by providing compliance support. This may involve helping navigate new regulations like “ban the box” legislation that prohibits asking about criminal records when filling out job applications or wage equity laws that mandate equal pay for equal work.
Before choosing between an employee PEO and professional employer organization (PEO), it’s essential that you fully comprehend their differences. While an employee PEO can offer employers invaluable services, PEOs are separate legal entities which take on all the responsibilities associated with being an employer; thus becoming co-employers to all the employees it services if terminated mid-year – tax consequences will apply and all the employees would be treated as new hires for FICA and FUTA purposes.
How do PEOs save you money?
Businesses turn to PEOs to reduce expenses associated with payroll and benefits management, but PEOs offer other cost savings opportunities too.
First and foremost, an effective PEO can help your company avoid costly HR-related pitfalls and errors, from hiring the wrong candidate for key roles to filing taxes incorrectly and incurring large fines. An experienced team at your PEO will offer advice and support that will allow them to assist in helping to steer you away from such costly mistakes, saving both time and money in fines.
PEOs can save you money in another way by offering competitive employee benefit rates at reduced rates, giving access to deep discounts only available through larger companies. This enables you to offer more appealing packages to employees and attract and retain top talent more easily.
PEOs offer additional cost savings by taking on all administrative costs and paperwork for you, freeing up valuable time to focus on running your business and staying compliant with employment regulations that may otherwise prove challenging for smaller enterprises.
PEOs make it easier and more cost-effective for companies to manage and grow their business by taking over many of these responsibilities, including: 401(k) plan administration; tax reporting/compliance; payroll processing; workers’ comp claims management and more.
PEOs can save money in the long run by helping to reduce employee turnover. Studies have revealed that businesses that partner with PEOs experience 14% lower employee turnover compared with those without PEOs – something which is costly as well as having detrimental impacts on morale and productivity.
PEOs can help your business save money by decreasing employee turnover and improving morale – leading to lower employee costs and greater profits for your company. Furthermore, they save both time and money by handling administrative duties for you.
How do PEOs help your employees?
PEOs take on much of the risk and administrative burden involved with managing employee processes such as payroll, benefits, workers’ comp insurance and retirement savings plans for an agreed upon fee (or share of cost savings offered) per employee. Furthermore, they provide you with recruiting services, job training programs and scheduling hours as well as safety practices and return-to-work programs for injured workers.
By outsourcing administrative tasks to a PEO, you can focus on building customer relationships and growing your business faster while offering your employees benefits they require.
One key benefit of working with a PEO is their comprehensive employee benefits package, including health, dental and life insurance; 401(k) plans; vacation days and sick leave policies, vacation days/sick days etc. This enables employers to attract and retain top talent; improve employee satisfaction rates and retention rates as well as increase productivity rates and boost overall productivity levels.
PEOs also serve numerous businesses, leveraging their network to negotiate lower insurance premiums and better rates for you. Furthermore, they may be able to offer services such as on-site health centers and wellness programs which would otherwise be too costly for smaller enterprises like yours.
PEOs also possess in-depth knowledge of employment law and HR regulations, which can save money in the form of fines and legal fees. Furthermore, their experts can help navigate complex regulatory changes like “ban the box” legislation that prevent employers from inquiring into criminal backgrounds on initial job applications as well as wage equity laws.
Cooperating with a PEO can significantly decrease the time you and your in-house staff devote to HR related activities, freeing them up for their core work duties and leading to higher productivity and ROI. Before making this decision, however, it’s essential that all relevant costs and benefits be carefully evaluated; review their history, read client testimonials, and request a demo of any technologies they provide before making your decision.
