Why Do Businesses Use A PEO?
Accurate named a Professional Employer Organization, because PEO companies focus on everything that has to do with employment. Businesses use a PEO service, to spend their time and resources on sales, service and growth instead of being a “professional employer.” From hiring and retiring, to risk management, payroll and employment HR issues - just a few of the many benefits include:
- Annual payroll services.
- Workers' compensation insurance savings.
- Unemployment claims administration.
- Access to Fortune 500 type employee benefits.
- Human resource help with employment related issues and compliance.
How Much Does Using A PEO Service Cost?
For starters, think of a PEO as a group of people to manage all your employment related administrative issues, but paying less than it would cost for one person. An employee leasing company's administrative fees run between 2% - 4% of your annual payroll on average. For example, a trucking company with 15 employees and a $400k annual payroll, would pay $8k at 2%.
As you can imagine, the difference in costs is based on the amount of work performed. If employee benefits are involved, with reporting of ACA compliance documents, COBRA administration, 401k management, etc - all will have an affect on pricing structures. But even at 4% - it's impossible to find a professional to manage payroll, risk management and all these tasks for $20k a year.
What Type of Businesses Use A PEO Company?
With over 900 PEO companies in the US, any business can find value these services. Currently, PEOs work with between 156,000 and 180,000 small and mid-size businesses, employing between 2.7 and 3.4 million people.
How Does The PEO Relationship Work?
When you use a PEO, you're entering into what's called a co-employment arrangement. Simply stated, the PEO acts as your back-office partner managing dozens of employment related administrative work.
As the business owner you report your employees' payroll to the PEO, then they send you an invoice for the total amount owed for the workers' compensation, matching governmental taxes and the PEO's administrative fees for processing your payroll. This is billed on a pay-as-you-go basis, eliminating workers' compensation insurance audits. You continue to hire, train and run your business as normal. The only changes you'll notice are lower employment related costs and more time to spend on profit producing tasks.
Why Use ELQ?
Our team has been in the PEO industry since 2001, so we have years of expertise in our field. We'll be your best resource to provide a PEO company that will best fit your unique business.
Professional Employer Organizations are different in their specialties, terms and pricing- and we save you the time and effort required to interview each one.
Just one call to us covers all of the bases, because we can quickly match you with a provider that meets your needs. Plus, our negation and leverage in the industry ensure you get the BEST pricing.
To learn more about the benefits of a PEO service, give us a call - we're here to help.