All You Need to Know About Choosing a Professional Employer Organization

A PEO can be defined as a relationship between you and the dedicated HR Management company to deliver a wide range of HR services on the basis of ‘co-employment’ model. With professional employer organization services, every business can benefit as risks and responsibilities are shared by the provider. When the law or regulation changes, compliance is the responsibility of the vendor, who integrates all employee benefit functions into a single source solutions that converts into real saving and improved efficiency for the business house.

A PEO cost effectively manages all human resources related function by acting as a proxy employer for your business. This leaves enough time for you to focus on your core business and leave the hassles of staff and its management to the professional employer organization. Choosing HR PEO services has proved more beneficial for small businesses across the USA.

Services offered by PEO companies

All PEO companies offer employee benefit administration, employee training, recruiting, workers compensation and administration, payroll and safety management. Nowadays, this arrangement is also called as employee leasing, joint employment or co-employment. The PEO company administers payroll, benefits and train the employees as well and provides accurate information to the business owner as well.

Who uses PEO services?

Using PEO services has proved to be most beneficial for small businesses for whom hiring a full time HR manager and maintaining an HR department is an additional overhead. PEO services have proved advantageous for bigger companies as well to provide employees to supplement the internal HR staff.

PEO is not just a staffing agency, but a company that handles the administrative task of the human resources as well. The tasks include not just recruitment, but benefits packages, health insurance, retirement plans and all the administrative tasks related to employment.

Advantages of using a PEO service

  • As the administrative task are handled by the PEO, the business owner Is free to focus on the core business and improve it
  • With so many laws and regulations, which are ever-changing there are chances of mistakes that turn out to be too costly. A professional PEO company keeps updated with the laws to ensure proper tax reporting and other payroll and insurance compliance to eliminate penalties
  • With a bigger employee base, larger PEO service providers are at a better advantage to negotiate benefits packages and lower insurance costs which ultimately benefit the business owner

Disadvantages of PEO services

  • It is psychologically difficult for the business owner to accept the loss over the control of human resources
  • PEOs may change their health providers regularly, which may be frustrating for the business owner
  • All PEOs provide the same level of service to their employees


Some PEO companies charge a flat fee while others may charge fees based on the employee or the service offered. When you are shopping for a PEO company, you must compare a number of companies on the basis of pricing plans and services they offer as the cheapest is not always the best in the long run.

Some PEO companies may hide the fees or services they offer and focus only on insurance and benefits that provide you saving. It is advisable to ask for a complete breakdown before you decide to work with that professional employee’s organization. Choose a PEO service to help you save on costs and free you of hr management hassles for your business to become successful.