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Joleen Jernigan
Joleen Jernigan

New to a Professional Employer Organization?

Updated:
August 15, 2022

Are you new to a PEO? Wondering what they can do above and beyond a single HR member on your team or an online employer services provider, such as a payroll company? The answer is: a lot!

We dig into everything you ever need to know about PEO services in this latest guide.

What is a PEO, and what does it do?

A PEO essentially serves as an outsourced human resources department invested in your company and its employees’ well-being. The reason for this is that a PEO acts as a legal co-employer. This means it helps you stay compliant (with payroll taxes and other necessary employer responsibilities) while offering a multitude of valuable HR resources (not to mention employee benefits) that would be typically time-consuming, challenging, and expensive for small companies to manage on their own. Although with a PEO, you are not the employer of record, you are still in control of the day-to-day work and making any final work decisions which are all outlined in a service agreement.

Working with a PEO is also an additional asset that can help you recruit and retain top talent, making you more competitive in the marketplace. Outsourcing your HR services and employee benefits provides your employees instant access to legal, payroll, and on-the-job HR questions, ensuring compliance while also making sure they have access to things they want, like decent health insurance. There are a lot of federal, state, and local labor and tax laws involved in employing people. A PEO helps you cross the i’s and dot the t’s legally so that you can focus on your company (and not be burdened by administrative tasks).

The statistics show that PEOs improve growth, employee turnover, and company longevity. The National Association of Professional Employer Organizations (NAPEO) cited a study by economists Laurie Bassi and Dan McMurrer, noting that “businesses that use PEOs grow 7 to 9 percent faster, have 10 to 14 percent lower employee turnover, and are 50 percent less likely to go out of business.”

What PEO services can help small businesses?

When a company partners with a PEO, the benefits provided allow the employer to focus on their business at hand and stop worrying about the nagging small but crucial details HR professionals deal with on a regular basis. For a smaller company, these details can be tedious and time-consuming, taking away from the tasks at hand of running and growing a business.

Handing over the grunt work, so to speak, to a PEO, helps provide peace of mind by giving your employees access to knowledgeable HR experts and access to legal and educational resources as well as technology. In addition, when you partner with a PEO such as Decent, you gain the buying power for health care plans and other resources of a larger company, bringing you and your employees savings.

Here are a few benefits PEOs offer:

Benefits: PEOs, with the negotiating power of a larger company, can provide appealing health insurance, life insurance, dental and vision insurance, 401k plans, COBRA administration, dependent care, workman’s compensation, and more.

HR Functions: Get the administrative details of managing employees off your plate and onto the PEO’s plate. PEOs can provide employee onboarding, employee handbooks, developing PTO policies and managing PTO, plus performance management documentation.

Payroll: PEOs take over payroll processing, manage withholding taxes, time-tracking, direct deposits, and payroll reporting to the IRS and state and local entities.

Advantages and disadvantages of a PEO

Does a PEO sound too good to be true? We assure you it isn’t, yet there are a few things to consider when shopping for some or several outsourced HR services. It’s a great solution for the right company. Different service providers provide different packages. If your HR team is solid, knowledgeable, and working well, you may consider outsourcing only a small portion of your HR needs. Not everyone needs the whole package.

PSPs (Payroll Service Providers) take care primarily of payroll needs. HROs (Human Resources Outsourcing), ASOs (Administrative Services Organizations), and staffing/recruiting companies all offer some of the HR services you may need. Some companies may find the cafeteria-style offerings that these companies provide a good way to supplement their internal HR teams, with only the services they are lacking. With a PEO, you are gaining a whole HR solution, and not everyone needs that.

However, unlike PEOs, PSPs, ASOs, HROs, and staffing solutions do not provide the security of a legal co-employer, nor do they create advantageous benefits packages through volume pricing.

Why choose Decent for your PEO needs?

Most companies didn’t get into the business of benefits administration, payroll services, and HR management. We did.

Decent is an excellent choice for companies needing a lightweight PEO. Decent is ideal for small companies and startups that find themselves scrambling to manage their businesses and grow, without getting bogged down in the administrative and legal muck that takes up a lot of time and can be quite stressful.

Decent was founded with a mission to be of service to small businesses and their employees, filling in the gaps of what we had seen out there previously. Each client co-employer working with Decent has their own Account Manager for customized service and personal attention when you or your employees need it most.

We started on our health insurance plan, as we saw the biggest need there. As such, we were able to create our own health insurance plans from the ground up vs. merely partnering with the big dogs out there that end up costing a lot for the employer and employee alike. Our zero medical deductible health insurance plans featuring direct primary care are beneficial and reasonably priced for all involved.

We have put together a desirable PEO plan for small businesses that serve as a plus to small business owners and their teams. Contact our Decent sales team to see where we can benefit you and save you money.