When companies grow, they suddenly realize that they don’t have the necessary know-how and expertise they should have to become a top employer on issues such as human resources, payroll management, accounting and tax services, law compliance, risk management, employee benefits and insurance programs. PEOs provide small and medium sized companies all these services cost-effectively, allowing clients focus on their real business, leaving the employment business to the actual professionals. PEOs can work for companies in any sector and companies of very different sizes, from the smallest to organizations with more than 500 employees. When they work for bigger companies, they work in association with the human resources department of the client.

PEO arrangement allows the client maintain a simple in-house HR infrastructure or none at all. The PEO provides crucial support in terms of compliance, protecting the client against liability and also reducing hiring overhead. Besides, the PEO provides time savings to the client, taking care of all the time-consuming administrative burden related to employment tasks. So the client can focus on the real core business of the company, growing its bottom line.

When a company contracts a PEO, the PEO co-employs the client’s worksite employees, creating a co-employment relationship, where both the client and the PEO have employment relationships with the employees, sharing responsibilities and obligations. The PEO is responsible for human resource management, payroll services, tax compliance, risk management… while the client is responsible for issues related with their business, such as product development and production, marketing, sales, service and business operations. And they both share certain responsibility for employment law compliance. This way, the client is the only one who controls the business operations, not losing any control or ownership of the company, while the PEO focuses on the employment-related concerns.

PEOs offer services and benefits to companies and their employees, but they do not supply labor to worksites. PEOs provide benefit plans to employees and human resources services to the employer. The PEO gives access to health insurance plans, 401(k) plans or other retirement savings plans and other benefits to the worksite employees of the client.

Employees are more satisfied and feel more secure when they are provided human resources services, health insurance plans, training, retirement plans, safety services, proper communications, working flexibility, discount plans, and other benefits and services. And happy and satisfied employees translates into productive employees. And very often, small and medium sized employers cannot offer all these benefits and services at a reasonable cost unless they contract a PEO.

So, if you are a small or medium sized company, and all employer administrative tasks are consuming too much time and resources, think about the possibility of PEO arrangement. It will save you many headaches and money, as well as helping you attract and retain top talent. If you need more information, please do not hesitate to contact The HRB Group.