Most people find themselves asking, what is a PEO? What does PEO stand for? PEO is short for professional employer organization. This is an organization or company that agrees to a joint-employment relationship with an employer by sharing or renting out their employees to the employer.
Thus, PEOs share and handle several employee-linked duties and liabilities. Through this, employers can outsource their human resource responsibilities, like employee compensation and payroll management, benefits, worker's compensation, and tax.
As a small to medium enterprise (SME) owner, discovering PEOs or professional employer organizations provides major benefits to one’s business. Through PEOs, a business can enhance efficiency and high quality management in their company, particularly in the case their employees.
PEO companies are also referred to as co-employment services, business process outsourcing, and even human relations or HR outsourcing. Through PEOs, a client can hire the management of human resources, employee benefits, worker compensation. Moreover, the PEO industry has also been a staunch supplier of services to all kinds of companies, whether a small business or not.
Aside from getting to know the PEO benefits and services, it’s also important to know its process and inclusions to ensure you’re getting the worth of work a business needs.
The process of professional employer organizations and employee leasing involves the client making a contract with their PEO of choice to lease their staff to fulfill work on projects. Then, PEOS are hereby responsible for the management of risk, employees’ behavior, employee tax compliance, and other business-related matters of employment.
PEOs then continue to search for employees and lease them to the client at an agreed-upon fixed rate, either hourly or monthly. On the other hand, the client business or company will handle the management of daily tasks of the leased employees. Although PEOs lease their staff to the client company, they are still the employee of record in government documents.
In short, the client company benefits from the services and work done by the employees but is saved from the work of human resources as there is an according to PEO HR.
What is a PEO in HR? Well, they are responsible for the administrative work such as employment, termination, and guarantee of compliance.
Many professional services are covered by PEOs. Through a PEO, your business can get administrative services from a different company.
Here are a few of the services a business can get from a professional employer organization:
Human Resources
Employment, training, and maintenance of employees, as well as making onboarding materials and assessing for background checks.
Brokerage Services
Linking your business to other PEO specialists.
Payroll Assistance
Handling the payroll of your workers and management of a company’s business tax responsibilities such as submitting W2 and 1099 forms.
Benefits Planning
Providing insurance, retirement plans, medical and dental insurance, and paid leaves for the employees working for your business.
Reassessing Work Compensation Claims
PEOs can reassess all claims to ensure that all the required forms are accomplished and shall investigate the claims of a business’s workers as well.
Risk Management
Handling government rules and policies and checking for ways to reduce business issues such as injuries and payroll conflicts.
If a business is aiming to reduce their labor costs, the Philippines is the answer for the best PEOs in terms of cost-efficiency. Since the Philippines is also abundant in young professionals, a business can rely on their strong labor force.
1. Recruiting and Hiring
Since a business is working in a co-employment setting, they benefit from less risks and liabilities to their business because the PEO would handle workers’ compensation and unemployment issues. Moreover, PEOs also handle the heavier task of background checks and interviews only to find the best employees for them.
2. Easy Payroll & Tax Management
PEOs also commonly provide payroll processing services, which can help relieve a business from the hassle of manual administrative processes that can lower productivity for human resources employees. Although, make sure to remember that the PEO will only process payrolls. The business is still liable for preparation before processing.
3. Reduced Operational Cost
Once a business works with a PEO, they lower the need to hire more employees to cater to menial tasks such as payroll processing and other HR-related functions. A business can also increase productivity in the core functions of the company in order to gain maximum profits and grow the business.
4. Compliance Assistance (Laws & Regulations)
Employment laws are complicated and constantly changing. Having to keep up with all of these laws can drain a company’s budget, but PEOs are able to help them with this. Since they can provide HR professionals, a business can be guaranteed assistance with ensuring employee compliance.
5. Increase Employee Development & Benefits
The aim of a company’s relationship with a PEO is to give their employees cost-effective, useful benefits without the stress of administrative workload. PEOs will offer several benefits to a company’s employees through its benefit plans that include medical, vision, and dental healthcare coverage, and even life insurance and retirement plans.
Since the PEO handles this, a business can focus on outsourcing more employees and gaining all the benefits from an increased workforce. A business’s core team can also experience more productivity due to being able to focus on more important tasks that are crucial to the heart of the business.
Since PEOs offer several useful services such as payroll management, risk mitigation, and employee compensation, a business can focus on expanding their company as they attain high quality workers. Through a co-employment model, a business also takes care of their staff while ensuring that the employees remain compliant to all the necessary regulations.
For smaller businesses, a PEO can serve as a major blessing to the work environment. Having a wider network of employees can increase their localized support and heighten cost-efficient productivity in favor of the development of their company.
As an owner of a small business or a beginning entrepreneur, the business’s finances must be secured. When one continues to develop their brand, they may encounter several spending issues that they have to bridge the gap of. Thus, it is important to ensure that a business has the proper employees without compensating any more of its budget. The same rule applies to bigger corporations and international companies, as its growth may bring in the influx of trouble with managing administrative work, thus leading to more spending which could be detrimental to the success of the company.
If a business can no longer provide for their employees’ morale such as through work benefits, what can it do to make them stay? This is where PEOs come in. Engaging in a co-employment model with a PEO lessens a business’s financial responsibility of taking care of its workers as well as mitigating the risk of employee disobedience. PEOs scout only the best for a company and guarantee 100% business compliance in accordance with the laws. If a business needs a helping hand in finding the right workers at an achievable price, then a PEO is for them.
Our team takes pride in providing customer-centric solutions for our clients. We commit our time and effort to build our partners’ trust. Contact our experts today, and we look forward to taking part in your company’s growth and success