How Partnering with A PEO Can Transform Your Business

At a glance

• The main takeaway: Partnering with professional employer organizations, or PEOs, can help small to medium-sized businesses (SMBs) better manage HR responsibilities like payroll, benefits, compliance, and more.
• Impact on your business: Partnering with a PEO can help sustainably grow your company, save time, and minimize errors in the long run.
• Next steps: Schedule a consultation with Aprio Partner Meredith Kowal to learn more about how a PEO can serve your company – and which PEO may be the best fit for your needs.

The full story:

According to the National Association of Professional Employment Organizations (NAPEO), SMBs that partner with a PEO grow 7-9% faster, have 10-14% lower employee turnover, and are 50% less likely to go out of business. The results are clear: partnering with a PEO can have a substantially positive impact on your business. To maximize those benefits and avoid any headaches, it’s important to do your research, understand your needs, and find the right partner.

So, what is a PEO?

A Professional Employer Organization (PEO) is a business services provider that allows small and medium-sized companies to outsource various HR functions, such as payroll processing, employee benefits administration, tax compliance, and other HR-related tasks. A PEO essentially acts as a part of your company, handling those critical back-office tasks so that you can focus on growing your business. Because PEOs become such an integral piece of your operations, it’s critical that you find a PEO you can trust.

How does a PEO partnership work?

When a company partners with a PEO, they enter into a co-employment agreement. Under this arrangement, the PEO handles the payroll and benefits for a company’s employees, while the client company manages day-to-day operations and employee supervision.

The PEO truly acts as an extension of your business, assuming responsibility for a wide range of HR functions, including payroll processing, tax withholding and reporting, workers’ compensation insurance, employee benefits administration for health insurance and retirement plans, and compliance with employment laws and regulations.

There are a wide variety of PEO providers to choose from and each has a unique selection of services. Deciding a PEO could be helpful for your business is an important first step, but deciding which PEO to partner with is even more critical, requiring a thorough evaluation of your own needs against the offerings of each potential provider.

The benefits

There are many benefits of partnering with a PEO that can streamline tedious processes and support more sustainable growth in your company.

1. PEOs can help companies reduce HR-related costs by leveraging their expertise, technology, and purchasing power, which can lead to tremendous savings in areas like employee benefits, payroll administration, and compliance.
2. PEOs manage employment-related compliance under applicable federal, state, and local governmental employment requirements and stay informed about important changes in regulation relevant to specific industries, which helps protect companies from potential legal issues and liabilities. This can be especially helpful to companies with widespread remote teams; a PEO can track and manage all the relevant compliance issues, which can vary depending on the location of your employees.
3. By outsourcing HR functions to a PEO, business owners and managers can save time and focus on their core operations, which can lead to increased productivity.
4. PEOs often offer access to a broader range of employee benefits and insurance options than SMBs can secure on their own.

The bottom line

PEOs offer small and medium-sized businesses a way to streamline HR operations, reduce costs, and gain access to better employee benefits. However, with the volume of PEOs and their various service offerings, business owners should carefully weigh the specific advantages of partnering with a PEO and thoroughly evaluate PEO providers to ensure they choose the right partner for their needs.

If you’re considering making the leap to partner with a PEO, Aprio can help you assess the marketplace and find the best fit for your needs. We work with our clients’ PEOs frequently as a part of our own service offerings and can leverage this direct experience to help you navigate the available options. Schedule a consultation today with Aprio Partner Meredith Kowal to learn more.

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