Top eight reasons to partner with a PEO for payroll services (and more!)

Learn why a PEO is the right choice for your business’s HR and payroll processing needs


Many small and medium-sized business owners take upon themselves a variety of important responsibilities of running their company such as payroll processing and human resources. 


As a business owner, wearing so many different hats all the time is not a sustainable option in the long run. It is essential that you and your team are able to focus on efforts to grow your business, serve your customers, and increase profits whenever possible.


If you have decided that a great way to maintain your focus on business growth is to outsource your payroll processing, you will likely come across two different choices: a payroll service provider (PSP) or a professional employer organization (PEO). Both of these entities offer payroll management services, but a PEO can offer so much more. 


Continue reading to learn why partnering with a PEO is the right choice for your payroll management and to explore the other PEO services that can greatly benefit your business.



What is a PEO? 

Before diving into the benefits of partnering with a PEO, it is important to gain a clear understanding of a PEO and how it differs from a PSP.


A professional employer organization provides outsourced HR and payroll services to small and medium-sized businesses by entering a co-employment partnership. 


PEOs allow businesses to share employment liability, provide their employees with more affordable benefits, and outsource their HR responsibilities, such as workers’ compensation, employee benefits, payroll administration, and employment taxes.


When it comes to the differentiating factors between a PEO and PSP, they vary in the way they operate with your business and the additional services they offer to clients. 

Learn more: 

What is the difference between a PEO and a payroll service provider?


With the definition and differentiators of a PEO clearly established, it is time to detail the vast benefits that partnering with a PEO for your payroll services can offer your company.



#1: Reduced liability

When your business chooses a PEO for your payroll services, you gain a team of experts that will process your payroll and employment tax obligations . 


The reduced liability that comes from partnering with a PEO can be especially beneficial for established small and mid-sized businesses and growing startups that are still trying to prove themselves in their industry.


#2: Minimized risk 

A PEO can help your business mitigate risks related to not only payroll, but workers’ compensation and human resources services as well.


Regulations regarding human resources and payroll can change rapidly and vary based on location. As a business owner, it can be difficult to keep up with changing regulations while handling all of the other responsibilities that are required of your role. 


PEOs are kept up to date on regulations and rules that are specific to both federal and states, allowing you to feel more secure that your business will not run the risk of non-compliance.


Most states, including Florida, also require certain businesses to have workers’ compensation. A PEO can help to greatly reduce your business’s level of risk regarding workplace safety and workers’ compensation by taking over all of the administrative duties of this required policy. They will work directly with the insurance carrier to minimize any costly claims as needed while also helping you create processes to get employees to slowly return to the job. 


Your PEO may also work with you and provide you with guidance to help educate your team about safety policies for everyone to gain an understanding of the importance of workplace safety. With the proper workers’ comp and safety training in place, your business can greatly reduce the risk of injured employees and non-compliance fees. 


#3: Reduced costs 

Although PEOs charge businesses for their services, there are many ways that PEOs can actually save businesses money and offer a high return on investment—on average the annual ROI of using a PEO is 27.3% based on cost-savings alone. [1]


Business owners are often forced to spend less time on business development efforts because they are handling different administrative roles and responsibilities that are extremely time-consuming. Once your business partners with a PEO, they help reduce these administrative burdens, so you can focus on efforts that will attract more customers, keep existing clients happy, and earn more profits. 


PEO professionals are experts at reducing the administrative burdens associated with HR functions such as onboarding, training, and safety protocols. Many business owners are not entirely familiar with the process of handling these same functions. Because of this, business owners may make mistakes without noticing, leading to costly fees and fines. Your PEO will provide guidance and training  to ensure that any expensive errors are avoided.


In addition, PEOs will assist with ensuring that your business is adhering to all employment federal and state regulations. If a business were to not follow any of these regulations, they are at risk for costly fees or even lawsuits. 


#4: Improved security 

As a business owner, it is your responsibility to ensure that your server, network, and payroll software are secure. If the server or network where you store your employees’ data is not secure, you open your business up to a data breach that risks you and your employees personal information. 


PEOs use servers and networks that are highly-secure and come with a variety of security features to ensure your business data remains safe. Many PEOs will utilize servers and networks that have encryption technology, anti-malware, and multi-factor authentication. 


When a business does not have proper cyber security measures in place, it will only take a hacker one successful attempt to access all of your sensitive information. 


PEOs are highly knowledgeable about what cyber security measures they need to have in place. By encrypting their servers, they are ensuring that the storage device or server that holds your information is protected and unreadable even if a hacker breached your network.


#5: Access to advanced technologies 

By using a PEO for your payroll service, 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 employee information and complete 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.


#6: Enhanced efficiency 

PEOs can greatly improve the efficiency of your business’s HR tasks and payroll processing, while also boosting the productivity of other operations by allowing you to focus on the primary functions of business growth. 


When your business works with a PEO, job security is also improved as the PEO implements efficiencies to lower employment costs. Job satisfaction and productivity increase when employees are provided with professional human resource services, training, safety services, and improved communications. 


A co-employment relationship with a PEO also provides your employees with expanded employee benefits to include a 401(k), life insurance, disability insurance, and more.


PEOs are also able to provide for lower employee turnover by 10%-14%. [1] High employee turnover can become expensive for your business, so it is important to make sure your employees are happy with their pay, benefits, and work environment to ensure they are less likely to leave. 


PEOs can help businesses provide their employees with quality benefits at more affordable prices, allowing smaller businesses to compete equally with larger companies for offered benefits. 


#7: Access to a variety of employer services

PEOs offer a wide variety of HR services to benefit your business as you see fit. Along with payroll processing and employment tax compliance, many PEOs offer: 

  • Human Resources: PEOs will offer numerous HR services to ensure federal and state compliance that aim to incorporate quality, convenience, and efficiency into your company’s daily functions.
  • Benefits Administration: When researching PEO options, look for one that offers a variety of high-quality insurance plan options for employees and their families. It is also important to consider short term disability insurance to provide peace of mind for employees should they be unable to work due to a personal injury or illness. PEOs are even able to provide employee benefit packages at group policy rates.
  • Workers’ Compensation: Your business’ PEO partner will be able to obtain your workers’ compensation insurance as well as take care of your employees’ claims for you. 
  • 401(k) Retirement Plan: PEOs can offer your employees quality 401(k) plans with easy enrollment, guidance, and retirement readiness. 


#8: Peace of mind

Ultimately, a PEO offers your business a greater sense of peace of mind than if you and your employees were tasked with payroll management and other HR functions. 

Your business will share liability with your PEO, but you can rest assured that the experts you hired are educated in HR and employment tax compliance, so that your business does not risk any fines or fees. 


Is your business looking for a PEO in Orlando? 

At PER, we have over 25 years of experience in the PEO industry and over 100 years of combined experience from our team members delivering outsourced HR services to small and medium-sized businesses across Central Florida.


With the extensive capabilities of a full-service PEO and the personal touch of a small business, we are your integrated, off-site HR department that fully supports you with a vast array of quality services that mitigate your employer-related liabilities.


We strive to build trusted relationships with our clients and provide value in our compliance and advising services that go far beyond simply running payroll. As part of our comprehensive services, we offer payroll management, workers’ compensation, benefits administration, and more. 


Ready to get started? 

Contact us today to learn more!


1: NAPEO | White Papers

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