What are Professional Employer Organizations (PEOs)?


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In today’s business world, there are a lot of acronyms and shortened terms that get thrown around. Professional Employer Organizations (PEOs) is one term that may be unfamiliar to you, but it’s something you should know in HR Outsourcing Services.

Professional Employer Organizations (PEOs) are becoming an increasingly popular choice for businesses of all sizes, and here’s why: PEOs can help your business save money, manage risk, and grow. Keep reading to learn more about PEOs and discover if they could be the right solution for your business.

Definition of Professional Employer Organizations (PEOs)

Professional Employer Organizations, or PEOs, are businesses that enter into co-employment relationships with their clients.

In a co-employment relationship, the PEO becomes the employer of record for tax and regulatory purposes, while the client retains day-to-day control over its employees.


Professional Employer Organizations (PEOs) typically manage their clients’ payroll, benefits, workers’ compensation, and unemployment insurance. By entering a co-employment relationship with a PEO, businesses can outsource HR functions and free up time to focus on their core competencies.

In addition, Professional Employer Organizations (PEOs) can help businesses to save money on employee benefits and workers’ compensation insurance. Professional Employer Organizations provide a valuable service to businesses of all sizes.

Advantages of Professional Employer Organizations

PEOs provide several advantages for small business owners and their employees. You can offer your employees affordable health insurance benefits that other companies might not be able to provide.

By partnering with a PEO, you could also receive discounted rates on these plans. Your staff members also gain access to disability and life coverage and retirement assistance in addition to all the fringe perks they may want – this makes employers more desirable overall. Hence, it helps attract high-quality talent for both parties involved.

The other advantage of PEOs is their reputable administrative services, which can be especially helpful for small business owners who already wear many hats and don’t have time to manage all the necessary paperwork. Since they’re experienced at managing human resources and administrative tasks, you’ll never need to worry about training or compliance again.

Plus, when it comes down to your employees’ safety on site, they won’t even think twice because these professionals take care of everything from health benefits through payroll tax regulations – providing unemployment insurance too. So workers stay compensated no matter what happens during work hours (or beyond).

Professional employer organization’s drawback is that you can feel distant from your employees. All questions about HR will now be handled by the PEO instead of contacting a company’s human resources department, which some contractors may not like since they are used to speaking directly with people in charge when there’s an issue or concern at their workplace.

Professional Employer Organizations’ Features

Hiring new employees is hard enough with worrying about all the legal paperwork, benefits, and compliance requirements. Partnering with a PEO will relieve your stress so much more than just hiring one or two temps now and then. It’ll be like taking care of everything automatically while also helping grow their talent pool by expanding into other markets where they can quickly bring on even more qualified workers because everyone wants what these businesses have going down inside them.

HR Administration


HR administration can be a hassle, but it doesn’t have to take up your time. PEOs provide as much or little human resource assistance depending on what’s needed. Their features are typically accessible through intuitive online platforms and mobile-friendly applications, which make using them easy – all in one place so that business owners don’t get overwhelmed with different responsibilities anymore.

Payroll Processing

The payroll processing function of a PEO is essential to managing time and attendance, paying employees accurately for their work while taking care of not only the legal requirements but also the company culture. A reputable organization will consistently deliver on time without any garnishments or liens filed against them, saving you interest fees if handled correctly from day one.

Risk and Compliance

If you have employees, it’s important to ensure they are properly insured and compliant with all applicable laws. A PEO comes in to help your business manage risk while complying at every step – from managing employee benefits packages to conducting safety inspections on site or even investigating accidents that may happen during work hours.

Employee Benefits

The employee benefits offered by PEOs can be attractive to many employees. Many organizations provide their members medical, dental, and vision insurance and life coverage; some even provide health savings accounts (HSA) or flexible spending accounts in addition to regular old-fashioned sick leave time off from work. These firms also supply long-term disability coverages that will replace 75% of wages should you become disabled while employed through them.

Workplace Training and Employee Development

Workplace training and development are essential for any growing company. That’s why most PEOs offer standard sexual harassment or discrimination workshops. Still, many also provide additional onsite training in leadership skills like communication methods specific to your industry culture (like how you should handle tricky clients). Some will go as far as providing industry-specific courses tailored toward helping employees grow professionally-all at no extra charge.

How to choose Professional Employer Organizations?

How do I find a PEO? Well, the first step of any business purchase decision is assessing your business’s needs and narrowing down which can help you solve those problems. After comparing the pricing & features of each company with the contracts they offer – it should be easy for anyone who wants their company represented efficiently.

To ensure the best fit between your company and this close partner, you’ll need to analyze your potential PEO thoroughly. Here are five steps you can’t afford to avoid.

Check licensing and accreditation

The company must meet all state and federal requirements when looking for a PEO. So begin your research by making sure the company is accredited, licensed, or registered as appropriate and in good standing with these organizations:

  • Employer Services Assurance Corporation (ESAC)
  • State licensing or registration
  • The Better Business Bureau
  • Local and state chambers of commerce

Ask for references

PEOs are happy to share references, so request three or five current customers’ contact information from them. If your potential PEO has trouble assembling such a list, there might be problems with their background check process, which should make you hesitate before hiring them as an employee.

Some questions to ask the PEO’s current clients include:

  • Why did you join a PEO?
  • How many PEOs did you review before choosing this one?
  • Why did you choose this particular PEO?
  • How has the PEO helped your business?
  • What do you wish you had known before you joined the PEO?
  • What are this PEO’s weaknesses?
  • How long do you plan to stay with the PEO? Why?

Explore the PEO’s online presence


It would help to look at the PEO’s public persona on social media and search engines. Check out their website, LinkedIn profile page, and Facebook & Twitter accounts to see what they say about themselves before you work with them! You can also try searching these sites for references of this company name or CEO if it is something that interests you.

Research the company history

The PEO is a company with an extensive history, which can be researched through its social media accounts and news stories. However, if you want more details about what they do, just talk to them and explain things firsthand.

  • When was the company founded? How long has the current leadership team been in place?
  • How many years has the company offered PEO services? Are its PEO services its core offering or a sideline to another business?
  • Where is the company headquartered? How many other offices does the company have, and where are these located?
  • How many corporate employees does it have?
  • How many clients and worksite employees (i.e., employees of client companies) does it have?
  • What is the company’s mission?
  • What are the company’s values?
  • What credentials do its staff members have?
  • Does the PEO have HR professionals in your company’s key locations? If not, what is their expected response time? Should you need them onsite?
  • How does the PEO usually communicate with its clients? Does it proactively contact clients or wait for clients to call?
  • Can you meet the people who will service your account?
  • How many clients does an account representative typically handle?
  • Can you see your service agreement?

These questions will help you understand the personality and compatibility of your prospective new PEO. They can also tell if their culture is aligned with yours for them to be an effective co-worker, which leads me to another critical question: how sustainable are they?

Professional Employer Organizations in 2022


The PEO industry has been on an exponential growth trajectory for the past five years, and this trend is expected to continue into 2022.

As employers evolve their services with changing needs of employees in mind, you can expect new tools designed to make remote work more manageable – especially when combined. There also seems like there may be some developments coming up involving increased integration between company policies or HR systems (which would allow people who have been laid off from one employer and then hired by another) without having any disruption during transition periods.

HR is an integral part of your business. With the growing number of employees who work remotely or in hybrid environments, finding a company that offers PEO services is crucial so you can continue providing quality care for them without being limited by location.

By offering employees a variety of benefits, including flexible scheduling and affordable health insurance coverage with no lifetime maximums or deductibles, PEOs can provide their workers better quality care and peace of mind knowing they will be taken good care of if something should happen. The additional top with these professional development opportunities is just a bonus.

Employers should work with PEOs to ensure a safe and secure workplace. Employers must remain up-to-date on all employment laws, including healthcare coverage for employees and sick leave policies that meet the needs of their business operations; these are just some examples among many others affecting small businesses today.

Professional Employer Organizations, or PEOs, are becoming more popular as businesses look for ways to reduce costs and improve efficiency.

If you’re curious whether a PEO might be a good fit for your company, please don’t hesitate to contact us. We would be happy to answer any questions and help you decide if this is the right solution.

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