PEOs for Small Businesses: A Game-Changer for Success

August 30, 2023・6 mins read
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PEOs for Small Businesses: A Game-Changer for Success

Table of contents

  • 1.What is a PEO?
  • 2.Benefits of PEOs for Small Businesses
  • 3.Cost effective
  • 4.Access to HR services and expertise
  • 5.Risk management solutions
  • 6.Employee benefits administration
  • 7.Taxes and payroll administration
  • 8.Self-service portals for employees
  • 9.Training and development
  • 10.PEOs for Small Businesses: Streamlining Your HR

In today's dynamic business environment, small businesses are always looking for an edge. Many are finding just that by working with a professional employer organization (PEO).

PEOs offer a wide array of HR services to small businesses. Their clients' leaders can focus on their core competencies and missions. In this article, we'll examine the benefits of working with a PEO and why it might be the competitive edge your business may need.

What is a PEO?

A professional employer organization offers comprehensive HR solutions to small and medium size businesses (SMBs). The PEO is the employer of record based on the allocation of responsibilities under the contract and assumes certain responsibilities for payroll and tax filing for its client businesses. When a business signs up with a PEO, they enter into a co-employment arrangement. The business and its employees report certain wages under the PEO's federal employer identification number (FEIN). The business maintains control over daily operations and employee management, and the PEO handles certain HR tasks. The PEO can help with benefits administration, payroll processing and compliance and offer human resources support. The arrangement helps business owners to concentrate on its strategy and growth while the PEO navigates the intricacies of HR services.

Benefits of PEOs for Small Businesses

According to the National Association of Professional Employer Organizations, PEO clients enjoy a better chance of survival, higher growth rates, lower employee turnover, and higher employee satisfaction. * Here are some specific ways a PEO can help your business.

Cost effective

It may be cost effective for SMBs to use a PEO. By pooling employees from its clients, PEOs can negotiate more cost-effective rates for health insurance and other benefits. PEOs provide streamlined HR support, from payroll processing to benefits administration. This consolidation can help with certain overhead costs licosts, there is a need to hire an in-house HR team or invest in specialized software. Additionally, the expert guidance PEOs deliver on employment-related rules and requirement can help with HR compliance.

Access to HR services and expertise

PEOs can be valuable allies to SMBs that lack in-house HR departments. With a PEO, SMBs can tap into a wealth of knowledge from seasoned HR professionals. They can cover a wide range of HR services from employment-related rules and requirements to talent management. This expertise helps companies stay on top of ever-changing local, state and federal rules and requirements and helps with non-compliance. PEOs also offer insights into best practices such as employee engagement, training, and performance management. By working with a PEO for HR outsourcing services, SMBs can gain access to HR expert advice and HR tools.

Risk management solutions

PEOs play a pivotal role in risk mitigation for SMBs, helping them with HR operational and employment-related rules and requirements. By leveraging the expertise of PEOs, businesses can proactively address HR compliance issues, staying updated with evolving employment-related laws and rules and requirements. This proactive approach helps the company to minimize the likelihood of being noncompliant. Furthermore, PEOs typically offer workers' compensation programs and help to facilitate claims management. They also offer help with training and help businesses to assess their onsite workplace.

Employee benefits administration

PEOs offer a significant advantage for SMBs in the realm of employee benefits. By consolidating the employee base from multiple client businesses, PEOs achieve economies of scale. They can negotiate premium benefit packages that rival those of large corporations. This means SMBs who use PEOs can get access to big company benefits such as medical and vision health insurance, flexible spending accounts, retirement plans, and other perks that attract and retain top talent, and is cost effective. This helps smaller firms compete for skilled personnel and foster loyalty by catering to employees' well-being.

Taxes and payroll administration

Instead of grappling with the complexities of payroll processing, SMBs can rely on PEOs to help with payroll services like:

  • Streamline payroll administration
  • Calculate and report payroll tax withholdings
  • Process payroll

Beyond just processing, PEOs provide compliance support with ever-changing tax laws and employment-related requirements, helping you to ensure compliance. Payroll processing can be especially tough for SMBs that are dealing with a global payroll. This comes with its own tax complications that payroll specialists may be better to navigate.

Many PEOs also offer integrated software solutions, allowing SMBs and their employees easy access to payroll information and reports. This not only helps with time and resources but also helps to provide information to ensures payroll accuracy, allowing business owners to focus on growth and strategy.

Self-service portals for employees

PEO companies with self-service portals are a game-changer. These digital platforms empower employees to independently:

  • Manage personal data
  • Access pay stubs
  • Request time off
  • Make and adjust benefit selections

SMBs benefit from reduced administrative burdens as HR inquiries decrease and manual data entry tasks are minimized. The portal helps with data accuracy as employees take ownership of their information inputted into the system, leading to possible fewer errors in payroll and benefits processing. Additionally, with 24/7 accessibility, these platforms cater to the dynamic schedules of modern workforces. PEO self-service portals help to streamline HR functions, enhance employee autonomy, and offer SMBs operational efficiency.

Training and development

Depending on the contract, PEOs might also help with employee training and development. Often, SMBs face budgetary and logistical constraints in offering comprehensive training programs. PEOs bridge this gap by providing access to a vast array of training materials, online courses, and professional employee development resources tailored to various industries and roles. This not only helps to ensure employees remain skilled but also aids in career advancement, boosting morale and retention. Leveraging a PEO's training expertise allows SMBs to foster a more competent, motivated workforce, driving both individual and organizational growth.

PEOs for Small Businesses: Streamlining Your HR

Leveraging PEO services is not merely about outsourcing HR tasks — it's about giving your small business the tools, support, and big-league resources needed to thrive in an increasingly complex corporate landscape.

TriNet provides small businesses with access to a level of HR expertise and resources once reserved only for industry giants. By tapping into TriNet's expansive knowledge and industry tailored solutions, small business owners can work through pitfalls and challenges that hinder their growth. In an era where agility, compliance, and strategic growth are critical, working with TriNet could be the HR solution that SMBs need.

*Individual business results may vary.

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.

This article may contain hyperlinks to websites operated by parties other than TriNet. Such hyperlinks are provided for reference only. TriNet does not control such web sites and is not responsible for their content. Inclusion of such hyperlinks on TriNet.com does not necessarily imply any endorsement of the material on such websites or association with their operators.

TriNet Team

TriNet Team

Best practices from our HR experts

Table of contents

  • 1.What is a PEO?
  • 2.Benefits of PEOs for Small Businesses
  • 3.Cost effective
  • 4.Access to HR services and expertise
  • 5.Risk management solutions
  • 6.Employee benefits administration
  • 7.Taxes and payroll administration
  • 8.Self-service portals for employees
  • 9.Training and development
  • 10.PEOs for Small Businesses: Streamlining Your HR
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