Renewal notices for PEOs will be going out shortly if you havenâ€™t received yours already. If this was your first year with a PEO or if this was 10th, there comes a time for every PEO subscriber to ask themselves, â€śShould I renew my PEO?â€ť There are some very good reasons to not renew with your PEO. If you are not happy with their services, definitely do not renew. At least not with that one.Â
Some companies have just done such a great job of growing that they wonder if they have exceeded their need for a PEO. Most small and mid-sized businesses seek the services of a PEO initially because trying to manage HR for their business and grow it at the same time was overburdening. There is definitely a time in a small business ownerâ€™s life where managing employees, benefits, payroll, keeping happy customers, and having a life outside of the work is not possible if you are doing them all at the same time. If you have gotten to the point where your business has shrunk so much that you can now manage it all, then donâ€™t renew your PEO. Chances are though, this is not you. Just another reason entrepreneurs love PEOs; they enable growth.
How Many Employees Is Too Many To Not Renew My PEO?
Plenty of entrepreneurs look at PEO solutions as a â€śfor nowâ€ť approach to employee management, thinking that one day they will outgrow it. That assumption is only partially correct. If you are pondering the question, â€śShould I renew my PEO or hire and HR manager?,â€ť there are definitely some points to consider before you decide to cancel your PEO.
First of all, how many employees is too many for a PEO can have some varying factors that makes that question not definitive for all businesses. For some, business is done in more than one country so things can get pretty dicey in terms of health insurance, retirement plan options, taxes, and other things when you are trying to stay compliant with employment law, not just in your country but others. Plenty of entrepreneurs have alarmingly found themselves hot water violating employment codes without knowing it in their own country. What do you know about the laws in say, Europe? Unless you are an attorney who specializes in employment law, chances are you donâ€™t know much. Most people donâ€™t.
Another reason some business owners may decide not to renew their PEO in favor of doing it in-house could be that they see what they are paying a PEO per month, per employee, and decide for what they are paying they could hire someone instead. This line of thinking is, again, a bit short-sighted. The average salary in most regions for a qualified, certified HR Manager is about $60,000 or more per year. Is that what you are paying in fees?
Add on to the fact that most HR Managers are not well-versed in payroll processing, so you will have to find someone to process your payroll also. That costs money. If you are paying an excess of $60,000 in PEO fees, chances are you wonâ€™t have time to process payroll on your own without incurring additional costs. Who is going to make sure you stay on top of paying your payroll taxes? If you donâ€™t go with a payroll processing solution to do your payroll in-house, you are going to have to keep up with that too. Then there is being able to protect yourself in the event an employee decides to sue you. That costs money too. Do you have extra money in the budget for a $60,000 HR Manager, a payroll processing solution, and now limited liability coverage? Tired yet?
Maybe I Should Renew My PEO But I Want More Options
More often than not, when business owners are chewing on this question it is because what they are not happy with is their PEO plan, not PEOs in general. If you have had your PEO plan for a while, this may be a good time to see what other plans may better suit your businessâ€™s needs. When growth happens, your employees needs change. Chances are your PEO is not fitting in with what you need now. Itâ€™s Okay, you can ask for more.
Did you know you can renegotiate your plan? You can also shop your PEOâ€™s competitorâ€™s plans to see what might be better for you. If you have only worked with one PEO you may not be aware of what else it out there that could be a better fit or even more cost effective.
PEO renewal time is a great time to ask yourself all of these questions but an even better time to speak with a PEO broker about analyzing the plan you have now and looking to see if something else would be even more beneficial for your employees and your business. A PEO broker like PEO Spectrum can also help you renegotiate with your PEO plan provider to help you get more for your money and keep what you love. Before you send that cancellation notice, make the call that will decisively help you answer the question, â€śShould I renew my PEO?â€ť