What is PEO? Is it the right solution for you?
A PEO, or professional employer organization, is a company that manages payroll, employee benefits, HR, and compliance for small businesses through a co-employment model. You keep full control of hiring and day-to-day operations, while the PEO becomes the employer of record for tax and administrative purposes. Partnering with a PEO lets small businesses offer big-company benefits at lower group rates and stay compliant with federal and Wisconsin employment laws.
What does PEO stand for?
PEO stands for professional employer organization. It is a firm that small and mid-sized businesses partner with to outsource payroll, employee benefits, HR administration, and compliance. Through a co-employment arrangement, the PEO becomes the employer of record for tax and insurance purposes, while you keep running your business day to day.
How does a PEO work?
A PEO works through co-employment. You remain the operating employer who hires, manages, and directs your staff, while the PEO becomes the administrative employer of record. The PEO processes payroll, files employment taxes, administers benefits, and handles HR compliance. Pooling many clients’ employees lets the PEO secure better benefit rates than a small business could alone.
How much does a PEO cost?
PEO pricing is usually charged either as a percentage of total payroll or a flat fee per employee per month. Costs vary with your headcount, the services you choose, and your benefit plans. Many businesses offset the fee through lower benefit rates and reduced HR overhead; NAPEO research puts the average ROI in cost savings at 27 percent.
Is a PEO worth it for a small business?
For many small businesses, yes. NAPEO research shows businesses that use a PEO grow about 7 to 9 percent faster, have 12 percent lower employee turnover, and are 50 percent less likely to go out of business than comparable companies. A PEO also frees owners from time-consuming payroll, compliance, and benefits work.
Will I lose control of my employees with a PEO?
No. In a co-employment model you stay the operating employer with full control over hiring, firing, pay rates, and daily management. The PEO only handles administrative and legal responsibilities such as payroll processing, tax filing, benefits, and compliance. You direct the work; the PEO manages the paperwork behind it.
How does a PEO help Wisconsin small businesses?
A Wisconsin PEO helps local small businesses compete with larger employers by pooling buying power for health insurance and benefits, while keeping them compliant with federal and Wisconsin employment laws. SustainableHR PEO, based in Madison, provides payroll, benefits, HR, and compliance support with local experts who know Wisconsin rules and your business by name.
As a Professional Employer Organization – or PEO – we allow our clients to outsource much of the work required by having employees. Our job is to manage and administer areas such as human resources, compliance, adherence to federal and state laws, payroll, and other administrative tasks related to having employees.
What Does Co-employment Mean?
Thanks to the co-employment model of a PEO, we take full responsibility for the HR-focused and administrative requirements surrounding the legalities of having employees, while you manage the day-to-day management of your team.
Through PEO outsourcing, we help you streamline operations and reduce liability, letting you focus on growth.
Additionally, we allow all our clients to pool resources, which gives you the ability to offer your employees the same (or better!) benefits at a much more reasonable cost. This approach significantly impacts the overall cost of PEO services, making it an affordable solution for small to mid-sized businesses.
Simply put, we become the “employer of record” for your employees, managing all the administrative work. However, you are the operating employer, with direct oversight of the employees who work for your business.
In other words, your employees are co-employed by both the PEO and your company. Through our PEO outsource HR model, you maintain control over hiring, firing, and daily management, while we handle the complex aspects of payroll, taxes, compliance, and benefits administration.
A Collaborative Relationship
A PEO doesn’t only manage the HR paperwork and administer benefits for your employees. We work as a team with each client, providing support, guidance and insight on areas such as recruitment, employee retention, training and more. We’re also on-call for your employees, answering questions and providing HR-focused resources to help them excel in their roles.
Benefits of working with a PEO
- Time Savings: Removes the minutiae of payroll, taxes, and other Human Resources responsibilities from business owners’ to-do-lists.
- Cost Savings: Lower cost benefit rates due to combined purchasing power of PEO, and the reduced cost of paying for in-house Human Resource staff.
- Reduced Liabilities: Your company will be in compliance with Federal and state employment laws, reducing your exposure to unintended fines and penalties.
- Greater Efficiency: The PEO manages all the administrative tasks associated with employees and compliance, filing payroll taxes and deposits, creating handbooks, and other needed
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