5 Tips: How to Choose a Perfect PEO Company for Your Business
Small and midsize businesses often face challenges due to their size. While SMBs can attract talent by offering a close-knit work environment, they can fall short in areas like workers’ compensation, health insurance, and benefits. Limited staff numbers can also shackle business growth.
These are just some of the reasons why many SMBs turn to professional employer organization (PEO) companies. PEOs help businesses by taking care of administrative tasks, freeing up time for more important matters. They also help SMBs obtain more competitive benefits packages, giving workers a level of coverage normally reserved for employees of larger firms.
The advantages of working with a PEO are clear. However, finding the best PEO companies for small businesses can be challenging, as PEOs offer varying rates and specialize in different industries.
This article gives five tips for finding the best PEO companies for your Nevada business.
What is a PEO Company?
A professional employer organization (PEO) is a company that assists small and midsize businesses with day-to-day administrative tasks such as payroll processing, employer payroll tax filing, benefits management, retirement plan management, and onboarding.
But a PEO is more than just an HR outsourcing company. When a PEO handles payroll and other tasks for a business, it becomes a co-employer.
This arrangement can have significant benefits for employees. Since the PEO is a larger firm than the SMB, it can negotiate competitive health insurance plans and other benefits that would not otherwise be available to the SMB.
Finding the Best PEO Companies for Small Businesses
According to the National Association of Professional Employer Organizations (NAPEO), there are currently 523 PEOs in the United States, giving SMBs plenty of options to choose from.
Here, we provide five tips that will help you find the right PEO for you.
1. Understand Your Needs
Before engaging a PEO company, your SMB should assess its growth plan, pain points, and budget. These three factors will determine the best PEO company for your needs.
Ask yourself, what level of growth are you hoping to achieve? What time-consuming tasks are currently limiting your ability to scale? Does your industry have complex compliance and regulation concerns?
2. Research PEO Providers
Compile a shortlist of suitable PEOs in your area, and remember that there is more to consider than the quoted price.
A key factor to consider when choosing a PEO is its accreditations, which should be stated on its website. The accreditation and financial assurance organization for the PEO industry is the Employer Services Assurance Corporation (ESAC), which provides independent verification of a PEO’s ethical conduct, competency, and financial reliability.
Other considerations should include the range of services offered, the potential for customized plans, and the PEO’s specific experience in your industry.
3. Evaluate PEO Proposals
When evaluating a PEO proposal, consider whether it addresses your pain points and whether the fee structure is reasonable for what the proposal includes.
Most PEO companies charge a flat rate per employee per month/year, with the rate varying depending on the number of services included. Use PEO comparison tools to determine normal rates, but read the small print for hidden fees.
4. Carefully Review the Contract
The contract between your business and the PEO company will contain more information than the initial quotation. Key considerations include the expected service and response times (SLAs), the contract length, and the stipulated termination fees.
A long contract with high termination fees could be a red flag. If the collaboration with the PEO falls short of expectations, you will have limited options for resolving the situation.
5. Prepare for Your First Meeting with a PEO
Meeting a PEO is your final chance to ask questions and determine whether the company is suited to your business. It also allows you to identify decision-makers and key points of contact.
During the meeting or call, you’ll receive and give information to lay the foundations for a working relationship. You’ll want to provide business demographics and headcount, as well as your growth plans.
You can also use this time to question the PEO about implementing customizations, integrating the technology through APIs, the PEO’s past experiences working with companies in your industry, or whatever else is high on your list of priorities.
Find a Tailored Solution with AdvanStaff HR
SMBs looking for a reliable PEO partner should cast a wide net, carefully assess their specific needs and goals, and push for fair terms. AdvanStaff HR can help you make an informed decision about what PEO solution your company needs. Let us give you a quick and easy quote today.
