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Companies bogged down by necessary employee paperwork, which includes payroll and other pertinent daily tasks, many of which can make human resources (HR) challenges a real hindrance to the growth of a business, often look to outsourcing as a solution. Constantly dealing with HR issues which, lets face it, in addition to being a huge distraction, can also make it easy to overlook some key revenue-generating opportunities.
A professional employer organization (PEO) can work with your company and provide comprehensive and affordable payroll and benefits services as a human resource department through a business-to-business relationship called co-employment. Because issues could develop that result in claims against your company you should purchase peo insurance to address these types of concerns.
Advantages of working with a PEO
Through the co-employment relationship, a PEO takes on many of your employee-related employer responsibilities while you continue to manage and run your business. What that actually means for your business is that your company remains the primary employer, so you’ll maintain control over managing your employees daily and core job functions, as well as overseeing your organizational structure.
As the co-employer, its the duty of the PEO to take on specific employer obligations, which you can set forth in your service agreement. This arrangement allows the PEO to handle key functions, such as payroll, benefits, tax remittance and related government filings.
Because it acts as an employer for those purposes, the PEO is given the ability to assume a greater amount of responsibility than, for example, a general payroll company. This arrangement helps employees as well. Typically, with any benefit plans sponsored by a PEO, your employees will be given access to a wider variety of benefits than your company could likely obtain on its own.
This includes better medical, dental and vision coverage, a health care flexible spending account, a retirement plan, life insurance and personal accident insurance, short-term and long-term disability insurance, adoption assistance, commuter benefits and educational assistance.
Payroll processing remains a vital service for your employees, including managing the regular compensation of your employees, along with payroll record maintenance and management, payroll compliance, online pay-stubs and W-2s, payroll management reports, garnishment and deduction administration and PTO accruals. Costly errors could cause huge concerns, so peo insurance will help re-mediate any errors or mistakes that could occur.
While many small business owners still take on the tasks of payroll and tax compliance, more and more people starting a business realize that these are issues that they really just don’t have the time necessary take proper care of. Using professional employer organizations (PEOs) can provide a unique co-employment opportunity that allows small businesses to access better benefit packages, standardize HR policies and practices, along with risk management support and workers’ compensation coverage.
A PEO differs from HR outsourcing companies or administrative services organizations due to the fact that a PEO participates as a co-employer. They are then able to employ a large number of employees to be used in thousands of businesses across the US. This helps lower health insurance costs and makes HR standardization a much easier task. A PEO may be the right choice for your business, but in the event that issues relating to lawsuits or other claims surface you need to be protected with a peo insurance policy.
The benefits of using a PEO
As a small business owner you’ll have access to many of the different services that are available through a PEO. You can choose from a selection of services based on your business needs. PEO service structure will vary from one company to the next, and there will be different cost structures and plan options you can consider. The PEO you choose will charge you either a flat rate per employee, or take a percentage of your total payroll in order to fund their services.
If you partner with a PEO many of those mundane corporate tasks related to most businesses will no longer be your concern. This arrangement provides you with more time to focus on the day-to-day operations of your business.In addition, PEOs have trained professionals that will ensure that your business complies with state and federal regulations. This includes tax structures, HR law changes, worker safety compliance and other risk compliance factors.
You’ll also benefit by being provided civil defense and employment liability insurance in the event that a former employee decides to sue the company for discrimination or wrongful termination. When you sign up with a PEO, you partner with a large company that can help provide resources in all legal matters. As long as you have peo insurance for employment practices concerns your business will be well protected and in good shape.