If you’re a business owner, you have probably heard about Professional Employer Organizations (PEOs). You’ve probably heard that they can help you with managing employee payroll and benefits, or managing human resources.
However, if you’re like many business owners, especially if you have a small business, you haven’t considered signing on with a PEO because you think you don’t need one. You might think that the services are too complex for your needs, or that you can’t justify the costs when you’re handling things on your own already. What you don’t realize is that there is more than meets the eye when it comes to PEOs, and some of the things that you might not know about them could be reason to reconsider.
1. PEOs Are for Small Companies, Too
You might think that only companies with hundreds (or even thousands) of employees need the services that a PEO offers. While larger companies do often use PEO services (Netflix is one of the major corporations that has used a PEO in the past), the majority of these organizations serve companies with anywhere from eight to 100 employees. Even if you have a smaller staff, a PEO can help you stay organized and manage some of the tasks that you don’t have the time or expertise to do on your own. As your business grows, so does the complexity of the rules governing how you operate your company, and even a simple paperwork error can cost your company thousands of dollars. A PEO is experienced in these issues, and can help you avoid the pitfalls that come with growth — and even help you save money in the process. In fact, not only are small business that work with PEO’s 50 percent less likely to go out of business, they tend to grow almost 10 percent faster than other companies.
2. PEOs Can Be IRS Certified
Working with a PEO can help your business be more efficient, but there are some tax implications in doing so. Some companies are hesitant to sign on with a PEO because they fear that they will be held liable for late or missed tax payments, lose out on certain tax credits, and potentially have to double pay wage taxes if they sign on after the start of the calendar year. To help reduce these risks, the Small Business Efficiency Act of 2014 established a voluntary IRS certification program for PEOs. By undergoing a rigorous approval process, a PEO can become IRS certified, which shifts the liability for unpaid payroll taxes to the PEO, not the business. Working with a CPEO also means that you will not lose tax credits or have to pay double taxes if you join a PEO after January 1. Not all PEOs are currently IRS certified, but many are going through the process of certification and it’s likely to become industry standard in the near future.
3. PEOs Lower Employee Turnover
Employee turnover is costly to any business, in terms of both time and money. By working with a PEO you can typically offer a more competitive benefits package that will entice your best people to stay. Not only that, but PEO’s can offer additional services to help increase employee engagement and satisfaction, including access to training programs, meaningful recognition programs, and help with team-building activities. In fact, companies that work with PEOs generally reduce turnover by nearly 15 percent.
4. PEOs Help With OSHA Compliance
If there is one constant with OSHA regulations, it’s change, and keeping up with all of the rules can be a challenge for a busy company. A PEO can help your company remain OSHA compliant by helping to update employee handbooks and other documents, conducting safety audits, and providing additional resources to help ensure your business is safe and following the most up-to-date guidelines. This ensures you avoid both costly fines from OSHA, and more importantly, the safety of your employees.
5. PEOs Increase the Chances of Being Named a ‘Best Place to Work’
Finally, working with a PEO can help your company reach coveted “Best Place to Work” status. Many of companies that have achieved this designation are part of a PEO, and leverage PEO resources to offer great benefits and ample options for training and development. Quite simply, by tapping into the vast well of services a PEO offers, you have a better chance of giving your employees what they need and want from an employer, increasing their satisfaction and boosting your public image.
These are just some of the things that you might not have known about PEOs, but are important to consider when you’re structuring your business. To learn more about PEO services and how they can benefit your company and help you reach your goals, click here to learn more about National PEO.