As a business owner, you have a lot of responsibilities on your plate, from managing finances to providing excellent customer service. However, one of the most time-consuming aspects of running a business is managing human resources (HR). This includes everything from payroll and benefits administration to compliance with employment laws and regulations. Fortunately, there’s a solution to your HR management woes: a professional employer organization (PEO).

In this article, we’ll explore what a PEO is, how it works, and how it can help your business succeed.

What is a PEO?

A professional employer organization (PEO) is a company that provides comprehensive HR services to other businesses. Essentially, a PEO becomes the employer of record for the client company’s employees, handling all HR functions. This includes payroll and benefits administration, workers’ compensation, risk management, compliance, and more.

How does a PEO work?

When businesses collaborate with PEO, they enter into a co-employment relationship. This means that the PEO takes on specific responsibilities as the employer of record. At the same time, the client company retains control over day-to-day operations and retains responsibility for managing employees’ job duties.

Under this arrangement, the PEO assumes responsibility for HR functions such as payroll processing, tax withholding and reporting, benefits administration, and compliance with employment laws and regulations. The client company, meanwhile, retains control over hiring, firing, and managing employees’ job performance.

By partnering with a PEO, businesses can benefit from the PEO’s expertise and economies of scale. Because PEOs manage HR functions for multiple client companies, they can negotiate better rates and access to benefits such as health insurance and retirement plans. This can help small and mid-sized businesses offer competitive benefits packages that are out of reach.

Advantages of partnering with a PEO

Now that we’ve covered what a PEO is and how it works let’s explore some advantages businesses can gain by partnering with a PEO.

1. Cost Savings

By outsourcing HR functions to a PEO, businesses can save money on overhead costs such as HR staff salaries and benefits. Additionally, PEOs can negotiate better rates on benefits such as health insurance, retirement plans, and workers’ compensation insurance, which can translate into significant savings for client companies.

2. Expertise and Support

Managing HR functions can be complex and time-consuming, especially for small and mid-sized businesses without dedicated staff. By partnering with a PEO, businesses can access the expertise and support of HR professionals who handle everything from payroll processing to compliance with employment laws and regulations. This can free business owners to focus on growing their businesses and providing excellent customer service.

3. Reduced Risk

Compliance with employment laws and regulations is a critical part of HR management. Still, it can be challenging for businesses to keep up with changes in the law and ensure that they’re following best practices. By partnering with a PEO, businesses can reduce their risk of compliance violations and legal issues related to HR management. PEOs stay up-to-date on changes in employment law and can provide guidance and support to ensure client companies comply.

4. Access to Benefits

As mentioned earlier, PEOs can negotiate better rates and access to benefits such as health insurance and retirement plans. By partnering with a PEO, businesses can offer competitive benefits packages to their employees, which can help attract and retain top talent.

5. Improved Efficiency

Outsourcing HR functions to a PEO can improve efficiency by eliminating businesses needing to manage these functions in-house. This can free up staff time and resources to focus on other critical business functions, such as sales and marketing.


In summary, partnering with a PEO can significantly benefit businesses of all sizes. By outsourcing HR functions to a PEO, businesses can save money, access expertise, and support, reduce risk, offer competitive benefits, and improve efficiency. If you’re struggling to manage HR functions in-house, partnering with a PEO could be the solution you need to take your business to the next level.

Say goodbye to the stress and hassle of managing your HR department! SustainableHrPEO offers tailored HR PEO services to support your business’s unique needs. Find out how we can become your trusted HR partner and drive your success by clicking here.