We get this question all the time, and luckily because we ARE a PEO, we can answer it!

Heres’s what to know about PEOs:

What does the acronym mean?
PEO stands for professional employer organization. Basically, this means that your company contracts its human resources tasks to a third-party company highly skilled in HR administration.

What does a PEO do?
A PEO manages your company’s human resources needs, and handles payroll and administration, employee benefits, workers’ comp insurance, staff training, and even ensures your company remains in compliance with state and federal agencies. A PEO will also take the lead on handling an HR-related employment claims so you don’t have to spend valuable time managing the claims process. Finally, PEOs can provide HR manuals, and policies and procedures to your company.

Are PEOs hired?
Companies contract with PEOs to essentially outsource their HR functions. Most PEOs offer a range of services from which you can choose. If you’d like to remain responsible for employee training for instance, that can be written into the contract.

Why are PEOs hired?
Many companies hire PEOs so the company can focus on its core business and not worry about administrative tasks. Because HR can be so time consuming, especially for small business owners, outsourcing HR management saves most businesspeople money and time. Often, additional money is saved by avoiding compliance and paperwork errors that PEOs are skilled at addressing, and having to pay the associated penalties.

Plus, because PEOs can take advantage of large-group pricing, using a PEO allows business owners to offer better benefits to their employees at a lower cost than companies that don’t use PEOs.

Will I be involved in the process at all?
You can be as involved as you’d like. You’ll still handle the important aspects of HR, which are to hire and supervise your employees. PEOs just give you the tools to do it more efficiently.

Most PEOs also use an HRIS (human resources information system) that you can access to view payroll records, personnel data, vacation and sick-time accruals and more.

Do PEOs really save companies money?
Usually, the savings on group health and benefits plans make up for the cost on hiring a PEO. It’s important to weigh all your costs first, of course, but we usually find that the cost savings associated with using a PEO are worth it.