The fact is, independent statistics show it pays to use a PEO, with businesses reporting increases in revenue and profitability. The cost of Professional Employer Organization services can vary depending on a number of factors, including the size and scope of the business and the specific services provided.
However, PEO fees typically include all or most of the major HR-related services, such as payroll processing, benefits administration, and compliance with employment laws. As a result, businesses can save a significant amount of money by outsourcing many administrative and HR functions to a PEO.
The average can vary depending on the size of the business and the services that are required. However, there are some general guidelines that can be used to estimate the cost of a peo. For example, a small business with fewer than 10 employees, the cost of a PEO can be as low as $250-$300 per month. For larger businesses, the cost of a peo can be upwards of $1,000 per month.
A PEO company's average administrative rate is between 2-4% of annual payroll. Consider how that estimate relates to your business. Is it possible to find a professional to manage all payroll- related administration throughout the year for that cost- not including the costs of check stock, payroll programs, annual upgrades and other related expenses?
Plus, that person would need to be a certified risk manager, able to review your safety manual, help identify potential workplace hazards and provide training material.
They would also need to be a licensed HR expert, able to minimize your employment liabilities, assist with hiring/Firing procedures, wage and hour laws, employee training, performance reviews, new hire reporting and more.
When considering the cost of a PEO, it is important to remember that the price is typically inclusive of all services provided. This means that businesses will not have to worry about additional costs, such as payroll taxes or benefits expenses.
In addition, businesses will often save money by using a PEO service, as they will no longer need to hire in-house staff to handle these functions. As a result, the cost of a PEO can be an excellent value for businesses of all sizes.
All businesses have these five cost factors in common. The right PEO can save you thousands of dollars on workers' comp insurance premiums, and time saved outsourcing payroll administration.
Federal Insurance Contributions Act is a Federal payroll tax imposed on both employees and employers to fund Social Security and Medicare
The Federal Unemployment Tax Act tax is a payroll or employment tax paid solely by the employer
The State Unemployment Tax Act is also a payroll tax paid by the employer and set by each state.
Insurance providing wage replacement and medical benefits to employees injured in the course of employment
Accurate and timely payment of wages along with dozens of other responsibilities.
David is the owner of a trucking company in Macon, Georgia. David currently has 13 drivers with an annual payroll of $413,000.
Even with a great workers' comp claims history, David's annual costs for workers' compensation insurance were over $72,000.
Working with a PEO company reduced David's work comp costs by over $30,000 annually, allowing him to provide more competitive bids for his services to grow his business.