The Benefits And Pitfalls Of A PEO Service

Small businesses often face an uphill battle when it comes to providing adequate coverage for their employees. For those who provide services that have added risk for worker’s compensation claims, this can mean higher fees and bigger headaches. Might an outsourced solution ease this burden? What about a PEO service?   In case you are not aware, a professional employment organization, or PEO service for short, is an entity that basically employs your workers for you, and leases them back to you so you can take advantage of the cost savings associated with having your employee base hired and managed by another entity.

The Good News About A PEO Service

  If you are trying to grow a solid business, trying to procure all of the necessary coverage for your employees can be an all-encompassing, mind pre-occupying experience. The PEO industry is designed to help alleviate that scenario so you can get back to what you need to do, working on your business.   The search for a PEO service can be a bit overwhelming. With over 700 choices out there, who would have enough time to get through all of the options? If you spent just 10 minutes on each website, you’d spend almost 117 hours or almost 3 workweeks trying to figure out which one was the best choice. Who has time for that?   When you select a PEO service, you can take advantage of the following:  

• Savings on health and worker’s compensation insurance
• Employment law advice as part of your service plan
• Free yourself of HR paperwork and background checks
• Eliminate the need to manage employee-related tax management and payments
• Choose from a wealth of healthcare and dental insurance options

  Sounds good, doesn’t it? For those who have marginal HR experience, this sounds like a pretty good deal, not to mention the cost savings in being able to take advantage of a service that is able to buy insurance coverage at a much better price point than a small business could. There is also the elimination of having to pay an accountant or payroll service to manage your payroll.

The Points To Consider Before You Move Forward

  There are always things to consider when you are considering a change in your organization, particularly when it affects your employees and your business operations. When you do enter into the selection process in finding a PEO service, you will want to make sure that you are choosing the one that is right for everyone involved.   If there is anyone thing that anyone who uses a PEO service regrets it is simply that initially they selected the incorrect one and had to make a switch to a new service. Buyer beware: Deep discounts and “too good to be true” tactics are very indicative of a PEO Service that is in trouble. When a PEO goes out of business, you lose from every angle. Make sure that the PEO that you are looking to align yourself with has a solid track record. Explore reviews and if possible, get references.  A little digging now will help you avoid a mess later on.   You should:

• Read reviews -If there are complaints of poor customer service, pay attention to that
• See if there are any Better Business Bureau reports
• Be wary of brand new PEOs or ones that have been recently acquired
• Avoid a PEO that has drastically lower rates that its competitors

  The way you handled cash flow issues is going to have to change. What you might have done in terms of “floating” payments on insurance premiums and payroll taxes is no longer going to be an option if you use a PEO service since everything is managed through them. If you are having trouble stabilizing your company financially, you are likely going to have to work through that first before you consider a PEO service.

Know When You Should Get Help With Your Decision

You don’t have to go it alone. There are PEO brokerage services that can help you wade through the details and get you some options that match your needs and company size. With too many choices for one person to go through, isn’t it good to know that there is a service that is working on your behalf to get you what you need and what your employees deserve?