Benefits of a Michigan PEO Service
Time is valuable resource for any Michigan business owner. That’s why more employers each year are realizing the advantages of using a Professional Employer Organization (PEO) to outsource time consuming, non-income producing tasks.
Removing the headaches of payroll, workers’ comp, benefits administration, and a list of governmental HR demands allows a business to focus on growth. PEOs were designed over 50 years ago to be a strategic partner in managing these employment related functions and responsibilities.
Some common PEO benefits include:
- Payroll Administration
Payroll is time consuming and can be complex for many businesses. PEOs make payroll simple by allowing employers to make one payment per payroll cycle, that is accurate, on-time and covers all their liabilities from payment of taxes, employee garnishments and more. Employers provide a list of their employees, hours worked, rate of pay – and let the PEO handle the rest.
- Workers’ Compensation Insurance
Businesses utilizing a PEOs “master work comp policy” save an average of 17%-20% on their workers’ comp insurance and many times much more. Even companies who’ve had injuries and claims issues can experience dramatic savings. Plus, there are no down payments, state policy fees, or work comp audits as the PEO performs a direct audit with each pay period.
- PEO Employee Benefits
A PEO can help you attract and keep the employees you need for your Michigan business to be successful. Whether you’re looking for group healthcare, dental and vision insurance, life and accident policies, or a 401(k) retirement plan – the right PEO partner can make this process simple and easy for your business.
Did you know that 45% of the average small business owner’s work hours are spent on HR-related tasks? Keeping up with local, state, and Federal labor and employment laws, risk and compliance, employee benefits, and unemployment claims require constant attention. A PEO reduces your liability exposure to these constantly changing risks.
Save Money By Using a PEO
A PEO's administrative fees are typically charged in one of two structures. A percentage of your annual payroll or an employee based yearly flat fee. In the employee based fee, average PEO costs range between $750 to about $1,500 per employee per year. For example, if a PEO were to charge $800 per employee annually for your businesses 10 employees – that would be $8k.
When under the percentage of payroll method, administrative costs typically run between 2-4% of your annual payroll. This means if your 10 employee business with an annual payroll of $400k was charged 2.5% - the costs for services would be $10k.
One of the many ways we help is understanding your employees wage structure(s) and pay period to identify the right method for you.
What Kind of Businesses Use a PEO?
Businesses in any industry can find value with a PEO. However, new businesses, along with small to mid-sized companies with between five to 100 employees typically see the most significant savings.
- PEOs provide services to between 2.7 and 3.4 million worksite employees and the industry's 173,000 clients represent 15.3 percent of all employers with 10 to 99 employees.
- From 2008 to 2020, the number of WSEs employed in the PEO industry grew at a compounded annual rate of 7.6 percent.
- The current size of the PEO industry is between $136 and $156 billion, as measured in gross revenues.
Why Use a PEO Broker?
PEO services were designed to help businesses save time and money. Using a PEO broker is all about maximizing the time and money you’ll save, by helping you access the right Michigan PEO provider for your business.
At ELQ, we’ve done the vetting on hundreds of PEOs from across the country since 2001, so you don’t have to. It can be time consuming searching for a PEO that has the right services to match your particular needs. Talking with an independent source like ELQ allows you to ask questions and get honest answers without the worry of being sold on a particular service.
A PEO brokerage solicits proposals for you and helps you negotiate better health and workers’ comp insurance rates. Our years of industry experience helps by understanding the PEO's profit centers and where specific fees can be reduced to your advantage. Call today, understand how a PEO works and where your business can benefit, or request a Michigan PEO quote today.