Business & Finances

Top 5 Advantages of Partnering With a PEO for Businesses

Managing human resources is a chaotic process that can lead to errors regardless of the intentions. PEOs have teams of experts who can handle payroll, employee benefits, workers’ compensation, and more.

Partnering with a PEO saves businesses time and money while reducing administrative burdens that can cause frustration and stress.

Save Time and Money

Running a business is time-consuming, and managing administrative tasks while keeping up with federal compliance requirements and attracting and retaining employees is often challenging. A PEO is an affordable way to save your business time and money, allowing you to invest more resources into your company’s growth.

PEOs can offer more competitive prices on health insurance, workers’ compensation, and retirement plans like 401(k)s by pooling their clients together. This can help your small business compete with larger companies for talented employees and boost employee morale.

While some worry that partnering with a PEO means losing control and decision-making power, this isn’t the case. While the co-employment arrangement does mean that the PEO becomes a partial employer of your workforce, they’ll only take on the parts of HR management necessary to save you time and money.

This includes payroll taxes, compliance assistance, and workers’ compensation. In addition, a PEO will take over liability for filing, reporting, and remitting taxes, as well as maintaining compliance with state and federal employment laws.

Recruiting and Retaining Talent

A PEO provides a full suite of services to assist in hiring. They help with job descriptions, screening applicants, and identifying qualified candidates for interview. This reduces the time spent on hiring and increases the likelihood of retaining employees.

A quality PEO has teams of HR professionals with extensive knowledge in HR compliance, payroll, benefits, and more. They keep track of changing regulations and provide advice to their clients. This helps mitigate risk and avoid costly mistakes affecting your business.

Workers’ compensation is essential to protecting your business against financial losses due to a workplace accident or illness. PEOs have access to lower workers’ comp premiums through their pooling of employees. A PEO can also help reduce your experience modifier rate (EMR), an insurance factor that drives up workers’ comp costs.

PEOs can offer employee benefits like health, dental, and life insurance, 401(k), transitChek, and other amenities that can help you attract and retain top talent. This is a significant advantage for small businesses who are competing against more giant corporations when trying to attract and retain talent.

Compliance Assistance

As a business owner, you must deal with an ever-growing list of tasks that demand your time and attention. Handling HR and compliance in-house can be overwhelming. Still, a PEO can provide the resources to save you time and money while protecting your business from costly employment-related claims.

PEOs live and breathe HR, so they’re familiar with all the ever-changing laws regarding employees. Whether it’s the new “ban the box” regulations on hiring, equal pay laws, or new rules governing how businesses report taxes, a PEO will be current on any new requirements that might impact your business.

A single workers’ compensation claim can be devastating to a small business. The benefits of partnering with a PEO are that your company is part of a pool of employers that share liability and help keep rates low. In the event of a claim, a PEO will have a team of experts to help you navigate the process quickly and smoothly. Likewise, if an employee leaves the company, a PEO can handle exit negotiations and termination agreements with the insurance company.

Payroll Management

The time your PEO saves on payroll management, HR administration, and workers’ compensation programs allows you to reallocate those resources into activities that will help grow your business. This helps your bottom line and insulates your company against certain risks that might otherwise hurt you.

For example, a workers’ compensation claim can devastate a small business. A trusted PEO manages your risk by pooling companies for insurance coverage and leveraging its expertise to minimize claim payouts. The savviest business owners know that protecting their business from claims and other exposures is essential to resiliency.

Another common issue facing small businesses is increasing healthcare costs. PEOs use their collective purchasing power to access group rates for their clients, which enables small businesses to offer competitive employee benefits packages on par with larger employers.

This can include life and disability insurance, 401(k) retirement plans, workplace wellness programs, dependent care, commuter discounts, and more. PEOs also ensure compliance with state and federal employment laws, avoiding mistakes that could lead to costly fines or penalties.

Risk Management

A PEO can help you level the playing field with larger competitors when offering employee benefits and workers’ comp. By taking over the administrative duties, they can save you money by reducing your risk of fines, lawsuits, and high unemployment claims.

This risk can be avoided by carefully monitoring and guiding people’s decisions, behaviors, and operations toward desired norms. Examples include financial markets, project management, sports, and marketing. These risks can be mitigated through statistical models and well-established policies, reviewed and adapted as needed.

Company owners and in-house HR teams often have limited time to focus on employee engagement and culture because of the numerous tasks they are responsible for. Working with a PEO to handle the HR duties gives them more time to invest in their employees and business development activities.

A PEO will also take care of safety training and other preventative measures that will lower the likelihood of workplace accidents, which can lead to expensive workers’ compensation claims. By partnering with a PEO, you will also be part of a large pool of employers that can negotiate better rates for workers’ comp insurance.


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