Already familiar with PEOs? Here are some more details.
A few frequently asked questions – and answers – for those interested in learning more about PEOs (professional employer organizations).
PEO stands for Professional Employer Organization.
A PEO provides Human Resources, Employee Benefits, Risk Management, and Payroll & Tax Administration services. For small and medium-sized businesses, these services can be extremely valuable for growing the business, employee happiness and engagement, and recruiting efforts.
We recommend following these steps when looking for a PEO partner.
- Check their Track Record, including fiscal stability and accreditation from ESAC or the IRS.
- Customized Services to meet the unique needs of your business and employees.
- Online reputation and client testimonials can help you get a better understanding when selecting a PEO partner.
- Check if the PEO company provides comprehensive support, including risk management and tax compliance services.
When you have partnered with a trusted PEO for handling Human Resources, Employee Benefits, Risk Management, and Payroll & Tax Administration services, you can devote more time to high-value business activities and focus on building your business.
An experienced PEO offers you the expertise of on-staff HR professionals and quick access to their experts in tax, labor law, benefits, risk management and workers’ compensation - all of whom can help improve your company's productivity and profitability.
By partnering with a PEO, you can gain access to Fortune 500-level benefits at a reasonable cost, allowing you to be more competitive in your industry while eliminating the challenges and expenses of managing multiple benefits providers.
A PEO can help you identify, manage, and mitigate employment-related risks. PEOs are committed to creating safe and compliant workplaces. We utilize our experience and knowledge to help clients achieve their safety and compliance goals every day.
One of the most important things for employers to understand about working with a PEO is that the PEO becomes the employer of record with federal and state governments. As a co-employer, the PEO offers dozens of services in the categories of employee benefits, human resources, payroll administration and risk management. Whereas HRO only offers administration for your existing benefits, HR and payroll.
When a company partners with a PEO, a “shared employment” relationship is created.
Shared Employment” means that both the company and the PEO have an employment relationship with the employee. In this relationship, the PEO typically assumes responsibility and liability for the employee administration functions of payroll, benefits, human resources, and risk management. The company still maintains control over all other employment aspects, including hiring, setting wages, supervision, etc.
While both are considered human resources outsourcers, they operate in different roles.
Staffing agencies recruit, screen, and place workers with companies.
Yes. Paying wages is an essential component of the co-employment relationship. Without this component, a PEO would not be able to provide workers’ compensation, health benefits, and other services that rely on the co-employment relationship. Employers provide the salary and hours for each worksite employee, and the PEO processes the payroll and files all the payroll-related taxes and reports.
The IRS established the Certified Professional Organization (CPEO) voluntary certification program for PEOs as part of the Small Business Efficiency Act (SBEA) of 2014. To be certified under the program, CPEOs must have a documented history of federal, state, and local tax compliance, financial responsibility, as well as organizational integrity. The voluntary, yet rigorous, certification process is aimed at identifying the PEOs that meet the high standards for compliance set by the IRS. For more information on the CPEO program, visit here.
What is a PEO and How Can it Help Your Business
A PEO relieves burdensome HR work from small business owners and helps lower employee turnover and helps a business grow faster.
Got another question?
That's okay! There's a lot to this, but our experts are ready to help.