The benefits of partnering with a PEO for human resources

Explore the reasons why your business should use a PEO for human resources services


Human resources departments handle many different responsibilities that can quickly become time-consuming. This is not always the most efficient or productive way to delegate HR responsibilities as a business owner. 


Professional Employer Organizations (PEOs) offer businesses the services of an off-site human resources department, leaving your team more time to focus on other efforts that aim to increase your business’s success. 


As 98% of business owners who are PEO clients would recommend a PEO to a small business colleague, it’s important to consider this option for your business’s human resources needs. [1] Continue reading to learn more about what a PEO can offer your business. 


How does a PEO work?

A Professional Employer Organization (PEO) is a co-employer and acts as an off-site human resources department to provide cost-effective outsourcing of HR services. PEOs co-employ their clients’ employees, and create a three-way relationship among the PEO, the client company, and the employees. 


PEOs are able to provide small and mid-size companies access to a fully scalable and robust HR department that provides a variety of HR-related services and benefits while reducing employer-related liabilities. 


Maintain compliance

Labor and employment laws are complex, and business owners may find themselves getting confused as these laws can change frequently and vary by state. It can be very difficult for business owners to keep up with these laws when there are so many other responsibilities that come along with owning a business and managing employees. Also, because PEOs share a certain level of liability with your business, it is in the PEO’s best interest to remain compliant.


PEOs help their clients’ businesses remain compliant in many different areas by keeping track of both state and federal employment laws. PEOs are also experts in human resources, so they are able to stay updated about any changes regarding compliance laws as soon as they occur. This ensures that your business will remain compliant even as employment laws change, helping you to avoid non-compliance fines. 


Payroll compliance is one of the most common areas where many businesses face the most confusion. In one survey, 59% of small business owners said they were familiar with payroll regulations that don’t exist, and 32% of small business owners admitted to making payroll mistakes. [2] 


Along with payroll compliance, many PEOs will help ensure your business remains compliant in other areas as well: 

  • Benefits compliance: PEOs make sure that your business’s employee benefits plans remain fully compliant with all benefit laws, such as HIPAA, COBRA, and ERISA. 
  • Labor compliance: When your business partners with a PEO, they ensure that you are complying with workers’ compensation and Equal Employment Opportunity (EEO) laws.
  • Out-of-state compliance: If you have multiple business locations or remote employees in different states, your PEO can help you register with the state’s unemployment agencies and remain compliant with the local minimum wage, sick leave, vacation, and other local rules and regulations. 


Read more: 

PEO vs. HRO: Which is right for your business?


Access to comprehensive benefits 

PEOs provide services to over 173,000 small and medium-sized businesses, and PEOs generally specialize in working with these size businesses. [2] The benefits that businesses of this size are able to offer their employees because of their PEO is one of the main things that attracts businesses to use a PEO. 


Many small and medium-sized businesses find it difficult to compete with large businesses and the benefits that they are able to offer their employees, especially because many employers are expanding many of their benefits, including healthcare. [3]


Due to the co-employment nature of PEOs, they’re able to have the combined bargaining and buying power of all of their client businesses This provides access to comprehensive benefits that are typically only available for larger companies with many employees, such as high-quality health insurance, dental insurance, and vision insurance. These benefits will make your businesses more competitive in new talent searches as well as keeping your current employees happy.


Reduces costs

PEOs can help your business experience cost-savings in many different areas. The co-employment aspect of PEOs assists their ability to be able to negotiate lower rates with benefit companies that your business would not be able to do alone. 


PEO employees are also human resource experts and are equipped with the technology and knowledge to complete HR tasks more efficiently. The average return on investment of using a PEO from cost-savings alone is 27.3%. [2] The cost-savings that your business experiences from partnering with a PEO can go towards other efforts to grow your business and increase your profits. 


While worker’ compensation is a legal requirement in most states, it can cost small businesses a lot of money to obtain it and stay compliant in this area. This is because workers’ compensation rates are based on an experience modification rate, or EMR, which is based on a business’s previous costs of injuries and predicted risk chances. The EMR is typically higher for small businesses, but with a PEO, small businesses can join their PEOs existing plan which is typically at a lower rate. 


A PEO can also help your business avoid costly noncompliance fees and fines. If your business were to fail to comply with labor laws, benefits compliance laws, or workers compensation laws, your business would be at risk of several fines and possibly legal fees. The HR professionals working at PEOs are experts on compliance laws and have the knowledge on what needs to be done to ensure your business is compliant in all areas. Your PEO can guide you and your team in developing processes and practices that will make it easier to stay compliant.


Access to other services

When you decide that your business should partner with a PEO for human resources, your business is gaining so much more than just HR functions. There are many other administrative duties that a PEO can assist your business with, leaving you and your team more time to focus on developmental efforts to increase profits. 

  • Payroll management: Any business owner can tell you how time-consuming it can be to keep track of payroll and taxes. When a PEO helps with this responsibility, you and your team will have more time to focus on efforts that contribute to the success of your business. 
  • Workers’ compensation: PEOs provide comprehensive workers’ compensation insurance to ensure your business has the proper insurance to deal with wage replacement and medical benefits for employees who are injured on the job.
  • 401(k) retirement plan: PEOs provide your business with flexible 401(k) retirement plan options that allow you to decide employer contributions, vesting schedule, and more. 


Another benefit to partnering with a PEO is that your business will gain access to advanced technologies. When you partner with a PEO for human resources services, your business will benefit from access to advanced technology without the costs of maintaining or replacing it. 


PEOs utilize modern, cloud-based servers to manage their clients’ employee information and complete HR and administrative functions, such as payroll processing. Cloud-based systems are much more convenient and allow your team to collaborate easier, which can improve efficiency and productivity.  Your PEO will also likely have your business’s human resources documents and paperwork on a cloud-based system to allow for easy, user-friendly sharing of information.


Is your business looking for a PEO in Orlando? 

PER has provided outsourced HR services to small and medium-sized businesses across Central Florida for over 25 years. We offer the extensive capabilities of a full-service PEO, while maintaining the personal connection of a small business. PER is your integrated, off-site HR department that fully supports your business with a vast array of services that mitigate your employer-related liabilities. 


When we partner with your business, we reduce your HR burden to allow you more time to manage the HR aspects that your business continues to have complete control of, such as employee performance, grievance issues, and recruiting efforts. Unlike the automated, conglomerate PEOs, our PEO professionals are always available to answer your questions or respond to your concerns as a genuine part of your HR team. As part of our comprehensive services, we offer payroll management, workers’ compensation, benefits administration, and more. 


Ready to get started? 

Contact us today! 



1: NAPEO | PEOs: Good for Businesses and Their Employees 

2: NAPEO | White Papers 

3: SHRM | 2020 Employee Benefits 

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