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Top 5 Reasons to Use a Professional Employer Organization (PEO)
and NOT a Traditional Service.
A PEO takes responsibility for verifying to the state that your business is in compliance with employee-related government policies and regulations, including Workers’ Compensation coverage, and pays all employment-related taxes on behalf of your business.
- 1. Enhanced Liability Protection. As a state-registered entity, when a PEO manages benefits and payroll on behalf of your business, they are required to be fully bonded and to provide verification from an outside certified public accountant that your financial requirements are being met.
- 2. A Strong and Trustworthy Relationship. A PEO is a full-service, hands-on team of experts that you can access daily.
- 3. Faster Growth. Businesses that use a PEO grow 7 to 9% faster than small businesses overall.
- 4. 10% to 14% Lower Turnover. Employee turnover for businesses using a PEO is 28% to 32%, compared to 42% for average overall employee turnover in the U.S.
- 5. 50% Less Likely to Go Out of Business. Businesses that use a PEO are approximately 50 percent less likely to permanently fail from one year to the next when compared to similar companies in the population as a whole.
Sources:
Professional Employer Organizations: Keeping Turnover Low and Survival High | McBassi & Company | 2014
Professional Employer Organizations: Fueling Small Business Growth |McBassi & Company | 2013
So, what are the differences between a PEO and a company that provides payroll services?
…the biggest difference is a PEO minimizes your risks by assuming liability!
What is a PEO?
A Professional Employer Organization (PEO) is a state-registered entity that manages benefits and payroll on behalf of small businesses, including paying wages and taxes and providing compliance assistance with relevant state and federal laws and regulations. In addition, PEOs often provide workers with access to 401(k) plans, health, dental, and life insurance, dependent care, and other benefits not typically provided by small businesses. A PEO can also provide human resources services.
Why is working with a PEO safer for businesses?
A PEO takes responsibility for verifying to the state that your business is in compliance with employee-related government policies and regulations, including Workers’ Compensation coverage, and pays all employment-related taxes on behalf of your business. A PEO must be fully bonded to meet these obligations and must also provide verification from an outside certified public accountant that these financial requirements are being met. For more information about PEOs, visit napeo.org.
