Wednesday, August 10, 2022

What is PEO and when should businesses use a PEO?

What is PEO and when should businesses use a  PEO?

Business scale-up is one of the most important parts of SMEs’ development plan to accelerate their growth. This almost always includes workforce expansion. A small-sized business may run into a problem where there is no dedicated department to manage hiring and requirements that come along with it, as well as payroll and benefits administration. This is where a professional employment organization - PEO jumps in.


What is PEO?

PEO acts as a “co-employer” with the company that it is hired to support. This means a PEO will share responsibilities with its customer’s employees.

PEOs typically help with hiring and referral processes, payroll management, employee benefits, and other human resource-related functions. In essence, PEO is a type of full-service HR outsourcing for business.



What is PEO and when should businesses use PEO? (Source: Internet)


What are the benefits of the PEO service?

One of the biggest advantages that a PEO offers is to help businesses accelerate their go-to-market strategies in new geographic locations.

It may take ages to set up a new business and recruit all the relevant expertise in a new market, while making sure that the recruitment process is strictly followed. This would also be costly to businesses, particularly those that only intends to have a handful of employees in the new location. 


What services does PEO offer?

The PEO will be “ready to go” from day one to provide business expertise in the following functions:

● Payroll processing

● Benefit plans

● Risk management

● Workers’ compensation insurance

● Cost savings




PEOs provide expertise for most of the important functions within an organization. (Source: Internet)

When does your business need to use PEO?

How to find out whether you really need a PEO or not? Consider all the factors that will help you determine the pros and cons in terms of the benefits and costs of using PEO. Thoroughly review all the benefits gained via PEO that match your needs. For example, you are only able to handle 85% of HR demands and need support for the other 15%. Therefore, understanding the scope of your needs is a way to justify your PEO need.

In any business decision, it is imperative that all angles of the solution are considered to determine if it is relevant to your business’s current and future operation or not. 

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