Is a PEO Right for Your Business? The Beginner's Guide on How to Evaluate a PEO Solution

Is a PEO Right for Your Business? The Beginner's Guide on How to Evaluate a PEO Solution

Consider PEOs for admin support, but choose wisely. Not all are equal; careful evaluation is key for small and mid-sized businesses.

By Austen Legler ・ 2 min read
Startups and Business Growth

As a business owner, you wear many hats, and administrative tasks are often not the most fulfilling part of the job. But, running your business efficiently and compliantly requires time and resources, which are often limited. 

This is why many businesses turn to professional employer organizations (PEOs) for help. PEOs offer a multitude of services that can save your business time and money. However, not all PEOs are created equal, and it's crucial to evaluate your options thoroughly. In this ultimate guide, we will discuss how to evaluate a PEO solution and determine if it's right for your business.

What is a PEO?

Before we dive into evaluating PEOs, let's define what a PEO is. A PEO is a third-party organization that provides HR, payroll, benefits administration, and compliance support to small and mid-sized businesses. Essentially, a PEO takes over the administrative tasks that eat up your time, freeing you up to focus on growing your business. 

So how do you evaluate if a PEO is right for you? The first step is assessing your business's administrative needs. Do you struggle with payroll, benefits, or compliance? Are you spending too much time on HR tasks that could be better spent generating revenue? A PEO may be a cost-effective solution to alleviate these pain points.

How to evaluate your options

Once you've established that a PEO is a good fit for your business, it's time to evaluate your options. Not all PEOs are created equal, and it's essential to conduct due diligence before choosing one. 

Start by researching potential PEOs and reading online reviews. You may even want to ask peers in similar industries for recommendations. Once you have a shortlist, schedule calls with each potential provider to discuss their services and pricing. 

Make sure to ask about their areas of expertise, as well as how they handle compliance regulations. A good PEO should have an in-depth understanding of the regulations and compliance requirements relevant to your industry.

How to select the right PEO

Next, consider the cost-benefit of partnering with a PEO. While PEOs can be a cost-effective solution, they also come with a price tag. Most PEOs charge a percentage of payroll, which can be as much as 40% of total payroll costs. 

However, partnering with a PEO can also save your business money in the long run. A PEO can help ensure compliance, reducing the risk of penalties or fines. They can also offer competitive benefits packages, potentially reducing employee turnover. Additionally, a PEO can help your business generate revenue by freeing up time, allowing you to focus on growth.

Another essential factor to consider is the level of service provided by a PEO. It's essential to choose a PEO that values customer service and has a high level of support. A good PEO should be easy to communicate with, responsive to queries, and offer personalized support for your business. They should also have a flexible approach to their services, allowing you to pick and choose the solutions that best fit your business's needs.

A PEO can be a valuable solution for small and mid-sized businesses that need support with administrative tasks. However, not all PEOs are created equal, and it's crucial to evaluate your options before committing to one. 

Start by assessing your business's needs, researching providers, and considering cost-benefit and service levels. By doing your due diligence, you can ensure that partnering with a PEO will ease your administrative burden and allow you to focus on growing your business.

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About the author

Austen Legler
Head of Partnerships

Austen Legler, an experienced marketer and sales professional, has worked with fortune 500 companies, startups, and more. As TaxTaker's Head of Partnerships, he leads the partnership strategy and is focused on building out TaxTaker's partner ecosystem.

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