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What is Professional Employer Organization (PEO): How It Can Help Your Business? 

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When HR responsibilities start accumulating and related costs escalating, businesses owners turn to professional employer organizations (PEOs) to get back things on track.  

Nearly 200,000 businesses across different verticals in the United States work with a PEO. Most of them are small to midsized companies who want to channelize their focus on business development through strategic thinking without being consumed by HR activities.  

If you run a business with one of your most pressing challenges being managing day-to-day HR tasks, working with a PEO may take all your worries related to human resources.  

However, if you’re new to a PEO then this post is for you. Read on to learn what a PEO means and how it can help your business.  

What is a Professional Employer Organization (PEO)? 

A PEO is an HR outsourcing firm that enters a co-employment agreement with your company to take care of HR-related aspects that you as a business owner may find challenging to handle alone, especially when you tap into other countries.  

Through the contractual sharing of employment responsibilities and liabilities, the PEO is responsible for HR processes such as payroll, benefits, worker’s compensation and local compliance. On the other hand, your organization retains the responsibility for maintaining direction and control of the day-to-day operations of your employees and business.  

Does your Business Need a Professional Employer Organization (PEO)? 

Let’s face it – running a business is challenging and time-consuming. As a business owner, you already have a lot on your plate from creating go-to-market strategies to implementing them successfully to gain an edge over your competitors.  

If you are a small or midsized business with no dedicated resources to handle HR, payroll and other employee-related services or can’t afford benefits that help attract and retain the best talent, you can end up spending half your day dealing with HR and employee-related issues.  

On the other hand, partnering with a PEO can free up your valuable time to focus on growing your business. In fact, according to the National Association of Professional Employment Organizations, companies that use PEOs grow 7% to 9% faster than companies that don’t use PEOs. 

Moreover, a PEO reduces the expenses associated with hiring a dedicated HR team for your company.  

What a PEO Can Do for Your Business? 

When you decide to partner with a PEO service provider, you’ll sign a co-employment agreement – also known as a co-employment relationship. Through this agreement, you and your PEO service provider contractually assign and share the employment responsibilities and liabilities.  

Typically, you manage your company’s direction and business operations including marketing operations, offering services or products to your buyers. On the other hand, your PEO service provider will provide a comprehensive HR and benefits package to your employees.  

Note*: You still retain control on key HR decisions. You decide what benefits to offer and who to hire. Your PEO service provider then takes care of the onboarding process i.e., day-to-day administrative activities.  

At a minimum, a PEO can help you with the following matters:  

  • > Employment benefits and its administration: cost-effective and comprehensive benefits such as dental care, medical insurance, vision care, retirement plans including 401(K) plans 
  • > Payroll processing: calculating tax deductions, salary processing and maintaining payment records for your workforce 
  • > HR compliance and employment tax compliance
  • > Risk management: PEOs help mitigate risks to your business, from tax filings to compliance and beyond 
  • > Talent recruitment and onboarding: PEOs can help you find qualified talent for your company along with handling the entire onboarding process  
  • > Worker’s compensation administration: PEOs can offer worker’s compensation coverage to your workforce via its own employee’s compensation insurance program 
  • > Other HR matters such as background checks and drug testing 

Along with providing assistance with all these matters, you can also count on your PEO service provider for HR support. Your PEO can help you make key employment-related decisions so that you can prepare yourself better for the future.  

What a PEO Can’t Do for Your Business? 

It’s important to know what PEO cannot facilitate before you decide to partner with a PEO. This will also help you understand whether or not working with a PEO is the right decision for your company.  

  • > Make hiring and firing decisions on your behalf  
  • > Take control of your business operations  
  • > Mitigating all global labor law as well as taxation risk 

So, if you’re running a business with your own legal entities in target countries but don’t have the dedicated HR resources to serve your employees’ needs. That’s when PEO service providers come in to make sure your workforce receives paychecks on time and has access to required benefits.  

Note*: Not all PEOs provide all services. Some may only provide payroll-related assistance but not benefits administration. Therefore, it’s important to consult with providers to discuss your needs so that you can work with the one that can fully cater to your requirements.  

How InfoStride Can Help Your Business?  

InfoStride provides PEO services to handle all of your HR needs with the goal to make your life easier and provide your workforce with high-level support. Our PEO services to businesses across different verticals span everything from talent recruitment & management, payroll, benefits, HR, and risk management to local compliance.  

If you’re still in doubt about whether or not PEO is the ideal solution for your company, talk to our experts today and get all your doubts cleared in a free consultation session.  

Conclusion  

Partnering with a Professional Employer Organization (PEO) service provider might be a big step for you but it can bring invaluable benefits to your business. Using the services of a PEO can mitigate costs and risks that you otherwise have to deal with without a dedicated HR department within your organization.  

Above all, working with a PEO as a co-employer is a win-win situation for you and your employees especially if you’re running a small or mid-sized business.  

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