Do I Need a PEO for My Business? Here's How to Tell

As an entrepreneur, you founded your business because you are passionate about what you do. However, on the road to success, you have probably found that your time spent pursuing your passion is crowded with other business needs, such as marketing, accounting and—the big one even before you hire your first employee—human resources.

While it may be overwhelming to think of tackling all aspects of your business while still trying to achieve your dreams, the good news is you don't have to worry about everything on your own. A professional employer organization (PEO) can help with your HR needs, making it easier to stay compliant and on top of the ever-changing world of HR, while freeing you to focus on the many other aspects of running a small business.

Deciding to outsource your HR is a big step. And deciding if a PEO is the right option for you can be tricky. 

If you’re considering a PEO, here are some factors to consider:

Am I prepared for an HR emergency?

Picture this: You are just about to pitch a potential client whose business would be very lucrative to your company when you get a call that one of your employees just filed a sexual harassment complaint against one of your managers. You don’t want to lose this opportunity to pitch, but you also have a major issue that needs immediate attention. Furthermore, you are not certain what steps need to be taken or how to respond.

So, whom do you call?

If you have a PEO that provides expert HR services, then you have someone to lean on when tough HR issues arise at your business. PEOs can help you mitigate some of the day-to-day risks that all companies face once they start hiring people. When working with a PEO, your company enters into a co-employment relationship.

Under a co-employment business model, employment-related responsibilities are contractually allocated between the PEO and its clients. This model allows the clients’ employees to receive the full benefit of the PEO’s services, including their employee benefit plan offerings. For instance, TriNet clients enter into a client service agreement with us that defines the suite of professional and insurance services and benefits to be provided by us, the fees payable to us, and the division of responsibilities between us and our clients as co-employers.

Here is a visual of the PEO model:

Do I have an unlimited amount of time or the ability to clone myself?

You probably started your business to provide a product or service that you love and to spend more time on what you enjoy. Very few entrepreneurs dream of having their own business so they can spend their days performing HR tasks. Let’s be real—HR is a huge undertaking, even for bona fide HR professionals.

In addition to all the paperwork, there is a laundry list of ever-changing rules and regulations to keep track of, and they usually come with hefty fines and penalties for noncompliance. Then there is all the work of staying on top of HR best practices, including building an effective company culture, developing leaders and providing the types of benefits and perks that help your company compete for top talent. And never mind all the time-consuming HR-related questions that employees will inevitably ask.

Even if you work around the clock and ignore all your other business duties, getting a firm grasp on your HR can be a losing proposition.

A PEO can provide you with the support you need to manage your HR—usually with a better price point than building your own in-house HR department. As you grow, they may also be able to offer you access to a team of HR professionals dedicated to providing you with HR support that fits your industry needs. This means getting a heads-up when employment rules and regulations change that affect your business, a resource your employees can call on when they need help navigating their HR, and an expert who can guide you in building and developing the team that help will take your business to the top.

Am I passionate about paperwork?

From new hire forms to time and attendance tracking to federal, state and locally mandated filings, having employees means having paperwork. And the more employees you have, the more paperwork you can expect. A PEO can help you cut the paperwork clutter by:

• Handling filing deadlines and timely distribution of items related to benefits, payroll and other HR issues. This includes required filings for Affordable Care Act documentation, annual benefits information required by the Department of Labor, Medicare coverage notices, W2 forms for your employees, and a slew of other forms and filings that few business owners want to deal with. 

• Providing the right technology to help you manage day-to-day HR duties such as payroll, benefits processing and scheduling time off. A PEO with a technology offering can provide you the software and apps you need to cut down on paperwork, save time, stay organized, maintain compliance and focus on running the core aspects of your business. Additionally, a mobile HR offering can allow your employees to manage much of their own HR tasks, conveniently and efficiently.

Do I have money to throw away?

You have a lot of options when it comes to purchasing all the items you need as an employer—including benefits, payroll management, workers’ compensation insurance, employment practices liability insurance, technology to process all of these items and HR expertise, just to name a few. You can buy these HR products and services individually, but few people have the time or knowledge to go that route. You can hire an in-house team but this is often not a cost-effective option for a small or midsize business (SMB).

Then what does an employer do when they need large-company HR on an SMB budget? For many SMBs, the best investment is to select a PEO.

Am I competing with big companies for talent?

Larger companies tend to have more resources than their SMB counterparts to spend on the types of world-class benefits that help companies attract top talent. These resources also include cutting-edge technology platform, retirement plans and even HR guidance in such important recruitment and retention perks as onboarding, leadership training, professional development and building a great workplace culture.

PEO services can provide SMBs access to the same benefits that their larger competitors enjoy, but at a price point that makes sense for them. And this offering can usually be bundled as part of a comprehensive solution with other critical HR products and services.

Would I rather do almost anything than deal with HR?

While we love HR, we know that not everyone shares our feelings. And that’s a good thing. The world needs a variety of innovators, risk-takers and people who think outside the box to build, create, produce and manufacture the products and services that are changing the world. If you would rather spend your time finding a cure for cancer, designing bullet-proof shields that help keep our streets safe, re-inventing healthy snacks or even changing the way we buy razors, then we believe that’s where your focus should be—not on HR.

Is it important that my vendors understand my industry?

Being an entrepreneur, running a growing business and competing in a specific space are all very challenging endeavors. Success is fueled by experience and having an HR partner with experience helping businesses like yours grow can be a true asset. TriNet is a PEO that has HR experts who are familiar with your specific industry, enabling them to act as a true strategic partner to anticipate and resolve your HR issues.

Can I find an HR services provider I can trust?

When you’re ready to hire a PEO, it is important to check their accreditation. Accreditation organizations include the National Association of Professional Employer Organizations (NAPEO), which is the national trade association for the PEO industry and Employer Services Assurance Corporation (ESAC), which verifies a PEO's financial solvency, compliance with regulations and other important industry standards.

If you have any questions about how a PEO can help your business succeed, give TriNet a call.

This communication is for informational purposes only; is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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