Allevity Blog

Should Your Small Business Work with a PEO?

Sep 28, 2015

Most small business start as a dream. The person at the helm has an idea, and they work themselves to the bone to bring that idea to fruition. Nine times out of 10, when you are talking to those visionaries – they will tell you that committing to their passion and finding a way to make it a business was the fun part. The actual running of that business is where the work begins. In fact, it has been suggested that business owners spend up to 40 percent of their time managing human resources related issues. 

And that is where a PEO can come in handy. 

What is a PEO? 

PEO stands for Professional Employer Organization. They came about in the early 1980’s with the goal of helping small businesses to manage their employee-related matters; things like payroll, benefits, workers’ comp, and all the other tasks you have to check off when it comes to managing employees. A PEO takes over that management for you, and in fact, the relationship is considered that of co-employers. Essentially, workers are employed by both you and the PEO. While you, as the small business, handle tasking and responsibilities, the PEO takes on the human resources related aspects of managing employment. In this way, small businesses are able to focus on their operational and revenue-producing tasks (the business at hand) while the PEO manages the paperwork aspects of running that business.

Pros 

For the average small business, there are a lot of benefits to contracting with a PEO:

  • They take the employment administration off your hands, giving you more time to focus on the core competencies of your business 
  • Their team of experts works to ensure your company remains in compliance with all government requirements
  • They can provide you access to enviable employee benefits packages, those that are designed with all their clients in mind – meaning reduced rates and greater benefits
  • All of this can make your small business a place more prospective employees want to work, allowing you the opportunity to hire top-qualified applicants

Cons

Given all those benefits, you’re probably wondering why all small businesses don’t contract with a PEO. Well, that’s because there are a few potential drawbacks to consider.

The biggest thing to keep in mind is that your PEO will be handling all your HR related matters. For some business owners, that can make them feel out of the loop or as though they have less control than they would if they were working with their own HR team. There is absolutely an element of letting go when it comes to working with a PEO. You have to be willing to let go of those aspects of the business, trusting in the professionals you have contracted with to be the experts in their field. Those who prefer to have a hand in every aspect of their business won’t likely be as happy with a PEO relationship. 

Bottom Line

The benefit when you do let go is that you gain those hours you would have otherwise spent toiling away on human resources matters, and you are able to apply them to the aspects of your business you would prefer to more focused on – creating revenue and focusing on your core competencies. So the question you have to ask yourself when considering whether or not to work with a PEO is, how much is your time worth to you? And do you trust in your ability to hire and train an HR team that would be as competent as the experts you could work with through a PEO?

If you have any further questions about working with a PEO, or how we might be able to assist you, please don’t hesitate to reach out. Here at Allevity, we aim to help you work smarter – not harder.

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