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PEO Services Review
What Is a PEO Service?
Day-to-day HR duties can be time-consuming and daunting. Without the right knowledge and up-to-date information, employers can make mistakes that affect their entire company. A professional employer organization, also known as a PEO service, takes away that burden and manages legal and administrative HR tasks for you.
When you use this type of service, you establish a co-employment relationship. This means you sign a contract with the PEO company, which becomes the employer of record. The PEO company becomes an administrative employer over your company. You handle all worksite duties, and the PEO solution handles administrative items such as payroll, benefits and risk management.
There are many benefits to establishing this contractual agreement with a PEO service. This relationship allows you to forget about the little tasks that do not produce revenue for your company so you can focus on the strategy and organization of your business. It can lower costs of hiring an HR staff, and most PEO services will provide the benefits for your company so you have experts available at all times.
Many PEO solutions provide the services to handle processing payroll, compliance issues and workers' compensation claims, and they assist with hiring and termination processes as well. With many PEO companies, you can choose the areas you need assistance with and create a custom agreement that fits your business' size and industry.
How Can a PEO Service Help Your Business?
While HR outsourcing services focus primarily on HR tasks like hiring, recruiting and employee development, PEO services provide a broader range of administrative tasks, including payroll, benefits and risk management.
PEO services offer human resources management services in addition to many others. The HR features include ways to manage performance, which might be surveys or annual reviews. PEO services also offer training resources, like webinars, live in-office trainings, and even original handbooks that you and the PEO service create together. PEO services can also handle more difficult tasks, like recruiting and terminations.
The laws regulating employment are constantly shifting and changing, making it difficult to keep track of compliance issues, especially if you're also trying to focus on other parts of your business. PEO services can help you stay compliant with the most recent laws on a national level and in your state. All of the PEO services in our review also provide workers' compensation, unemployment insurance, claims management and return-to-work programs for when an employee is coming back after being injured.
Preparing, processing and distributing payroll can take up a lot of your time, and you run the risk of making errors, which could cost you more in the long run if you do payroll yourself. PEO services remove the headache of payroll and can significantly decrease the amount of time you spend on it each pay period. By taking care of payroll processing and distribution, tax administration and filing, paid time off accrual, and W-2 preparation, the PEO services in our review make running payroll easier and more efficient for your business.
To recruit and keep the best employees, you want to offer competitive benefits. However, it can be time-consuming to manage and administer these benefits. This is where PEO services can help. They administer benefits such as health, vision and dental insurance, as well as 401(k)s and other benefit options.
Is a PEO Service Right for You?
PEO services can be helpful for many businesses, but they're not right for everyone. Below is a list of questions to help you determine if a PEO service is a good fit for you. If you answer yes to several of them, it might be a good idea to seriously consider a PEO service.
- Do I need to expand my HR staff?
- Do I lack the budget to hire HR experts?
- Do I want to do more to encourage my employees to grow and improve?
- Am I having trouble keeping track of the various employer and payroll laws?
- Are HR tasks taking up too much of my time?
- Am I letting other aspects of my business slip because I’m too focused on HR compliance?
What Are the Pros & Cons of a PEO Service?
As with any service, there are pros and cons to using PEO services. Here are some things to take into consideration while determining if a PEO service is right for you.
- It ensures your compliance with local and federal laws, even if your business has locations in different states.
- Some liability moves to the PEO service instead of your company.
- It saves you money on HR staff.
- It streamlines HR tasks like payroll.
- The PEO service owns all records, instead of your company.
- It may interfere with company culture to not have in-house HR staff.
- You have less control over HR tasks, workflow and performance.
- You may have to sign long-term contracts that you either can't cancel or have to pay penalties to cancel.
PEO Services: What We Evaluated
Top Ten Reviews has evaluated and reviewed PEO services for over three years. In order to recommend only the best PEO services, we ensured that each company in our evaluation is a NAPEO member. NAPEO, or the National Association of Professional Employer Organizations, is a trade association that consists of companies with the most valuable service and ethical performance.
We only evaluated companies that offer PEO services themselves; we did not include any service brokers. This means that we did not include companies that collect your information and then refer you to their partners. Instead, these companies service your business themselves. We chose not to evaluate brokers because the services and contracts offered by their partners vary greatly, making them difficult to evaluate side-by-side fairly. Direct services, like the ones we review here, are easier to evaluate accurately.
In our review, we looked for companies that provide HR services, benefits, payroll and risk management. All of the services in our review offer these features. This may make it difficult to differentiate between them and choose the one that’s best for you. We found that where the services vary most is in contract length, cost of service and available support.
Verdict & Recommendations
Ultimately, the PEO service you work with depends on the needs of your company and what you’re looking for in a service contract. All of the services we reviewed are reputable and offer many of the same services across the board, and none of the companies we recommend are subpar. Paychex, Oasis Outsourcing and Employer Solutions Group ranked highest in our evaluation because of their top-notch customer support, contract terms and accessibility.