I have talked to many staffing professionals and many of them ask the same questions when talking about a Professional Employer Organization (PEO) or PEO solution for their staffing company. The questions below are a short list of the most popular PEO questions and answers.
What is a PEO?
A Professional Employer Organization, or PEO, provides a co-employment relationship with a company and handles all the administrative functions of employing personnel. A PEO company usually manages workers compensation, payroll tax administration, and other human resources activities. The PEO also creates the paychecks associated with your employees, or a group of your employees. (Since PEO companies buy payroll insurances for tens of thousands of companies (and hundreds of temporary staffing companies), their payroll tax burden rates are often much less than that of an independent owner.)
What can a Professional Employer Organization do for my company?
By delegating human resources functions to a PEO company, you are free to focus on the most important aspects of your business: obtaining new job orders and recruiting and placing the right personnel with your clients. Your PEO partner is your own human resources and payroll department - even if your company is just you.
How does my finance or factoring company work with my PEO partner?
It's simple. Every week, when your PEO partner produces your payroll, a payroll bill is submitted to you and your factoring company. Your factoring company wires this amount (that covers all payroll-related expenses) to the bank where the checks are written. You receive the checks (usually drawn on large, local banks) and comprehensive weekly reports of all payroll-related transactions from your PEO partner. How does a PEO reduce my employee-related paperwork? Your PEO partner will provide a comprehensive array of services and benefits through their unique programs. When issues related to workers compensation or unemployment arise, your PEO partner helps you manage the situation by dealing with the problem employee. All employee tax filings and regulatory forms are completed by your PEO partner, too.
Should I use a PEO Broker?
When looking to compare PEO services, one should start by identifying PEOs that can service staffing companies. The workers compensation carriers for many PEOs decline all types of staffing companies as a prohibited type of business. Finding a short list of PEOs that do provide services can require major effort, and this is where a good PEO broker can help. One area for comparison is the quality of service. Unfortunately, not all PEOs provide the same level of services. Taking a close look at company literature will not enable you to determine all of the comparable differences. Experience is the only way to truly determine the quality of service provided by a PEO. A good PEO broker has placed many clients across the country into PEO relationships and brings this experience to your staffing company. As an advocate on behalf of your staffing company, the PEO broker will hold the PEO accountable for taking care of their clients.
My business' back office expenses just keep growing. Can a PEO help me with that?
Yes, PEO companies buy insurance coverage in much larger quantities than independent owners, so their costs are lower. If you team with a PEO partner, you will receive these costsavings. To remain competitive, your PEO partner constantly searches for the most cost-effective insurances, and to retain your business, they pass the savings along to you.
How can I make sure that I do not lose control of my company?
Actually, you can expect just the opposite. Since you will not be spending all your time on paperwork and dealing with administrative, employee-related issues, you can spend more time managing your sales growth and exceeding your clients' expectations.
Why are staffing companies choosing PEOs as the way to manage their business?
There are three reasons:
1. To reduce payroll cost.
2. To reduce employer-related liabilities.
3. To offer a broad array of health and employee benefits to fulltime office staff, if desired.
A PEO almost always has more competitive rates for workers compensation and unemployment that you can receive as a temporary staffing company. Employer-related lawsuits and litigation are increasing nationwide. Instead of shouldering the expense of these situations, a PEO partner manages this process for you, should it arise. So, you will not be alone.
The PEO solution that best fits your staffing company is only a phone call away. Call today, I would be happy to make a professional recommendation on PEOs and PEO brokers that might best fit your needs.
Marty Gray is the President of Staff Brokers Inc. He can be contacted at 877.416.0668, or by email at marty@staffbroker.net, or visit www.staffbroker.net.
