PEO services - Helping to save time and money

Read how employee leasing can streamline safety procedures, administer benefits, and manage HR responsibilities.

PEO services – Helping to save time and money

When you run a company, you have to keep tabs on employment practices, provide detailed employee handbooks, and comply with all federal and state labor regulations. A professional employer organization (PEO) can manage these administrative responsibilities and free up your in-house resources to concentrate on growing the business.

Hiring PEO services involves more than simply passing your HR responsibilities over to them: the PEO actually become a co-employer of your personnel. As the legal "employer of record" for your entire staff, the PEO hires your employees and leases them back to you. They then use their own tax ID to submit payroll records and file taxes, offer benefits, and secure workers' compensation insurance.

PEO services may appear to be a solution for large companies, and they certainly can be. But the majority of PEO customers are actually small businesses with 15 - 20 worksite employees and little to no HR staff in-house. It all depends on what your company wants to do. PEOs help the little guy obtain the savings and benefits that large companies enjoy. Meanwhile, they allow large businesses to offer employees new benefits that are difficult to administer and manage – such as 401k and flexible spending plans.

So what does a PEO offer?
A PEO vendor brings the four core competencies of business to your organization:

1. Safety and risk management: If you’re looking for the key selling point of PEO services, this is it. PEOs assume liability if somebody gets injured on the job or accuses a co-worker of harassment. They also ensure compliance with all employment laws and OSHA regulations, and assure there's no discrimination of age, sex, or race in the hiring and policies.
2. Payroll processing and taxes: PEO services take responsibility for your payroll taxes and responsibilities. This includes distributing paychecks, processing direct deposits, deducting taxes and retirement account funds, and sending out year-end tax statements.
3. Benefits administration: Saving money is a top concern for every business, and PEO vendors help tighten purse strings with discounted rates for health and dental insurance, disability plans, life insurance, employee retirement plans, and COBRA.
4. HR management: PEO vendors ensure compliance with ever-changing federal and state labor regulations. They help create employee handbooks and training documentation and place updated labor law posters where staff can see them. They also help recruit new talent by advertising for open jobs, prescreening candidates, and conducting background checks and drug screenings.

The costs of PEO services can vary based on industry and the services you require. In addition to an initial setup fee – usually $1,000 to $5,000 – PEO vendors charge 2% to 6% of each employee’s gross salary per pay period. They may also charge additional fees for some payroll services, recruitment methods, and training, or bundle all services into a single package.

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