A Professional Employer Organization (PEO) is a separate company that contracts small businesses to provide employee-related services, generally in human resources. This includes functions like payroll and taxes and benefits like workers’ comp and dental.
For many entrepreneurial small business owners, as their company grows, they become bogged down with the seemingly endless paperwork involved with payroll, tax reporting, insurance, and employee disputes. They would also like to offer their employees comparable benefit packages as a reward for sticking with the company and attracting and retaining good workers. Unfortunately, the company has not immensely grown large enough to warrant an HR department or to afford the benefits it would like to offer.
What are the Benefits of a PEO?
That is where a PEO comes in. The PEO is a larger company that will contract with your company to supplement your needs. The employees are part of both organizations. You are responsible for their daily work and supervision; the PEO is responsible for the HR end. Because the PEO is a large company, it has access to the lower rates of group plans and ancillary benefits like dental, making it affordable for your company to offer.
Benefits
The contract terms you sign delineate how much and what services you get from the PEO. That means you don’t need to work with multiple providers, but everything, or whatever you need, is consolidated with one specialty company.
- Benefits Package – Because the PEO is a large company, it has access to a more significant number of perks at better rates than a small or even medium-sized company can get on its own. This can include:
- Medical, dental, and vision
- Retirement savings plans
- Life insurance
- Flex accounts
- Workers’ Comp – Besides the insurance coverage available, the PEO can help with administrative functions like safety checks, claim negotiation and resolution, and consultation. They can also connect you with insurers who allow “pay as you go” workers comp premiums.
- HR – This can work in conjunction with your existing team or act as the entire team on its own:
- Drug testing
- Employment verification
- Hiring and recruiting
- Manuals
- Training
- Payroll – This can be a one-stop shop if you want. It can handle time off accruals, direct deposits, pay stubs (manual and/or electronic), W-2s, record keeping, and management.
- Consultation – The PEO can become part of your strategic planning group, financial advisor, and investors.
Disadvantages
There are always downsides, and here are some things to keep in mind:
- Ceding Control – You give another company control over your people and the established processes. For a small company, that can be flexible on time off.
- Influence – You can lose some of the corporate cultures you have established.
- Security – Employee documents are now shared between the two companies.
- Employees – Your current staff could become confused about who they work for or how their lives will be altered.
This is merely part of your responsibilities as a small business owner. Contact us today, and we’ll help you find the right Florida workers comp insurance. You and your business must be protected, and we can provide you with a free, no-obligation quote.