PEO
WHAT ARE THE BENEFITS?—By joining a PEO platform, you are grouping together under one tax ID number with hundreds of other companies. You now get to enjoy all the perks that big businesses have, such as worker’s compensation savings, lower employee benefit cost, a Fortune 500 employee benefit package, and unemployment tax savings. Many business liabilities also disappear under this platform. All workers' compensation claims are now that of the PEO as well as the unemployment claims. This is a major way to keep overheard cost and risk down in your business. In the end, you should see an improvement in your bottom line.
WHAT IS INCLUDED?—The four core areas the PEO handles for its clients are Payroll, Employee Benefits, Workers' Compensation and HR Management. Please see the SERVICE GRID for a full list of services.
DO I LOSE CONTROL OF MY EMPLOYEES?—NO. ABSOLUTELY NOT. Many people falsely believe that under this set-up they somehow lose their employees. This is not the case. You as the business owner still control all of the day to day aspects including hiring, firing, job duties, etc. The PEO just assumes the back-office liability and is there to assist you on your day-to-day HR matters in a “co-employment” relationship.
The acronym “PEO” stands for Professional Employer Organization. PEOs were established in the mid-1990s and they are now a common platform for businesses from one employee to around 300. You might hear this platform described as “co-employment” or “employee leasing.”
HOW IT WORKS—Through a contractual agreement, the PEO assumes certain client liabilities pertaining to payroll processing, payroll tax, workers' compensation insurance, employee benefits, and government compliance. This is the case because through the contractual agreement, the client agrees to have their employees put on the PEO’s payroll and filed under the PEO’s tax identification number. Now, in the eyes of the Department of Labor and the IRS, the client company is part of the PEO’s company and no longer has the employment liabilities and duties that come along with employing people.