Running a small business these days can be difficult. You must worry about the daily operations of your business, figuring out where to allocate your company resources, and also have to deal with expanding your operations. On top of all of that, you also have to focus on managing the human resource requirements of your business, from payroll to benefits management. 

It can seem like running a small business can be akin to walking on a tightrope, a careful balancing act of responsibilities that can be overwhelming at best, but outright disastrous at worst. This is where a professional employment organization (PEO) can come in and help with the stress by handling all of your business’s HR needs. 

As the title suggests, in this article we’ll be discussing five big ways that PEOs can help your small businesses with their HR needs. So, if you’re running a small business and need some convincing on if a PEO is right for you then keep reading! 

What is a PEO?

Professional Employer Organizations (PEO) help small to mid-sized companies handle their everyday HR needs that would be a hassle to do inhouse. PEOs handle services like payroll processing, employer payroll tax filling, benefits, workers’ compensation, and other human resource functions that are needed to run a business.

PEOs work under the co-employment model, meaning that when you partner with a PEO, the organization becomes the employer of record for your full- and part-time employees, but you retain full control over your business and employees. This allows for reduced administrative burden, mitigated risk, and allows the utilization of comprehensive compensation packages that will make employers more attractive.

One example of the benefits of a PEO is if your business experiences high turnover rates and your state unemployment tax rate (SUTA) is high. Under the co-employment model, you have the option to be under the PEO’s SUTA rate which can thus lower your rate and improve your organization’s SUTA over time. 

Five Benefits to PEOs

There can be significant advantages of choosing a PEO to handle your HR services, especially if you’re a small employer that may not have the HR expertise or system capabilities of a larger business. Below are five of the biggest benefits a small business can gain by choosing to go with a PEO:

  1. Vendor Management– Running your own HR department inhouse can be a hassle as it is a job with many hats. Typically, small businesses have to deal with at least eight different vendors to keep their HR department in fighting shape, vendors like recruiters, payroll companies, safety specialists, insurance brokers, etc. Going with a PEO allows them to take the burden of vendor management away so you can focus on building a profitable business.
  1. Experienced HR Partner– When choosing to go with a PEO, you end up employing a skilled group of HR professionals who’ve dealt with multiple clients. That experience when dealing with the complexities of HR issues is unparalleled in gaining a business edge. Partnering with a PEO allows for you to buy into a larger pot of HR professionals, freeing up resources to focus on the aspects of running a business.  
  1. Benefits Packages– A big benefit of a PEO is its ability to provide cost-effective comprehensive benefits for your employees without the administrative and regulatory headaches that come with it. As a co-employer, the PEO is able to offer a wider variety of benefits to your employees than if you were to handle it inhouse, such as vision, dental, life, and disability, etc. As the plan sponsor, the PEO handles all of the administrative tasks like negotiating rates, enrolling employees, providing legal notices, and handling COBRA administration.
  1. Administrative Relief– PEOs can also help with one of the biggest HR burdens, HR administrative tasks. These tasks are the gears that run your business-like tax filing, unemployment and workers compensation claims management, payroll processing, reporting, recruiting, etc. PEOs assist in this area by taking the burden off of your business, allowing for more resources to be allocated towards growing your business.
  1. Compliance Assistance– HR law can be confusing and cumbersome to a small business, especially if you run an operation that crosses state lines. Keeping up with all of the countless new HR and payroll laws, regulations, and rules that apply to your business can be costly as the fines of violation can be huge. This is where PEOs can give you a big advantage over an in-house team. You’ll have access to a legion of trusted advisors whose sole job is to keep up to date on any changes to the law to not just keep you safe, but the rest of their clients safe as well.

The benefits listed above are not an exhaustive list, but they are some of the biggest benefits that small businesses can get from choosing to partner with a PEO. Working with a PEO allows you the benefit of seeing your investment in human capital grow through a single source. If you are still on the fence about whether you should choose to go with a PEO for your business, you can get in contact with one of our experts to provide a consultation! 

Looking to expand your business but bogged down by your human resource needs? Need to begin thinking about how to start expanding your business? solveHR is here to help your business by offering you our team of HR experts so you can focus on what matters—Growing your business!


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Written by: Matthew Muriel

Meet Matthew! Matthew is our content writer and has been working with us for a year. He enjoys working for SolveHR because it allows him to practice his copywriting and allows him to build experience in his fledgling career. Matthew studied at the University of Texas at San Antonio and earned his degree in English with a concentration in Professional Writing. He values learning new processes in the HR industry and then conveying those ideas to the company’s clients. When he isn’t working, he enjoys reading nonfiction, with his favorite book that he recently read being The Gene by Siddhartha Mukherjee. If he could go anywhere in the world he would travel across the United States and visit all of the national parks.

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