Tag Archives: HR

How many employees do I need to be considered by a PEO (professional employer organization)?

Easy…one…but it cannot be the owner of a sole proprietorship (you can’t lease back yourself).  That said, most PEO’s are looking for 10 plus employees, and I have seen companies with more than 5,000 using PEO successfully.

If your company has less than 10 employees, the likelihood is that you will use the PEO for hr, payroll, benefits admin and safety.  However, the health plan will probably be carved out in put in your name, although the PEO should administer it for you, making necessary payroll deductions.

PEO’s for startups

We come across startup companies all the time and have found that the PEO relationship is the best solution, as it allows the business owners to focus on their core business and let the PEO do its human resources thing.  The time and money saved with a PEO can make or break a startup.

Consider this…if you are a startup, or consulting to a startup company, then the best way to insure success is to focus on your core competencies, and not HR.  Your PEO will handle most functions…with the main exception of deciding upon your staff.  Otherwise, payroll, benefits (including health, dental, vision, 401k, and various supplementary insurances), workers compensation and risk management, payroll taxes, etc. are all responsibilities that are passed along to the PEO.  Imagine the time savings!

In order to obtain a quote from a PEO for services, a startup will need to supply some basic projections on head count and gross payroll, as well as job risk description, so the PEO can place the employees in the proper workers compensation code.  The PEO will do its due diligence and research the background of the principles of the startup, but that’s about it. 

If you are a startup, and are looking towards outsourcing your HR, then PEO may be for you.

Does HR Outsourcing save Money?

A better question would be, is time = money?

If you recognize that time is money, then a company that engages a PEO or ASO or other HR outsourcing solutions will definitely save money.  In particular, there are areas where a company employs staff to handle time consuming hr functions.  This time can be freed up with a PEO or ASO, allowing more time on strategic functions or revenue generating areas of the business.

A PEO or ASO will save a company time by writing employment policies and producing employee handbooks, researching medical insurance plans, implementing a loss control program, providing HR and compliance training for managers and supervisors, benefits administration, vacation and sick leave tracking, responding to unemployment claims, records administration, and many other hr functions.

In addition, you will possibly see hard dollar savings by consolidating your current hr functions to one provider.  For instance, instead of separate payroll provider, 401(k) administrator, workers’ compensation and unemployment claims management, Section 125 administration, insurance plans, COBRA administration, etc., and paying fees for these services as a small business to multiple vendors, with a PEO or ASO, you are paying one vendor.  Thus, eliminating margins to various vendors and saving money.