How Using a PEO Can Help You Save Money


PEO stands for “professional employer organization,” and it’s an outsourcing option more companies are choosing. Businesses that outsource their human resources can grow faster and enjoy lower employee turnover, among other benefits.

Businesses across the United States are looking for ways to cut employee-related costs. As companies continue to balance the need for adequate staffing with staying on budget, it has become increasingly important to look at the cost of HR per employee.

Studies have shown that large organizations spend an average of $1,400 per employee, per year on human resources. Mid-sized companies spend $2,000 per employee, per year. Staying on top of the regulations has become more costly than ever.

HR administration and compliance may have become more complex, but technological advances have made these needs easier to address. You can save time and money by letting a PEO handle your company’s human resources.

Getting the best PEO is an investment in your business’s future. Understanding what a PEO is and what it can do to meet your needs is the key to selecting the right product.

6 Things PEO Software Can Do for Your Company

Although there are many ways PEO software can benefit your organization, these are the six key services they can offer you. These are the reasons so many companies are making the switch to PEOs.

1)   Easier Payroll

Any human resources administrator is familiar with the hours involved in preparing the payroll. You can easily spend an entire day organizing the details and completing the paperwork. A PEO can handle that work so you can free your time up to focus on growing your business.

2)   Improved Recruitment

A PEO can simplify the recruitment process by working directly with your company to attract talent. They can also develop recruitment and onboarding materials to promote your company’s culture to show the right applicants why they should want to work there.

3)   Employee Training

Your PEO can help your employees grow their skills. They can accomplish this by offering custom training, creating training seminars, and more. They may also be able to give your workers access to outside learning sources that can improve their performance.

4)   Lowering Turnover

A PEO can help you keep top talent by negotiating an impressive benefits package. Benefits are a chief reason many talented people stay with their companies. Making these benefits easy to understand and access will keep your employees happy.

5)   Taxes

PEOs understand business taxes, and they can take the work out of navigating the complexities of your company’s taxes such as garnishing wages or withholding child support. They will provide you with tax reports and make sure you know where you stand.

6)   Compliance

The dangers of non-compliance for your business are very real. Even a small mistake in payroll or employment can result in fines, fees, and in the worst case scenario the suspension or loss of your business license. A PEO will stay on top of the regulations.

In addition to the above benefits, you may also want to look for a PEO company that provides the following services, depending on your company’s unique needs:

  • Brokerage services
  • Employer liability management
  • Worker’s compensation
  • Employee leasing services

Although there are many options to choose from, not every company is going to be the right fit for your business.

Why You Should Outsource Your Human Resources

No matter how large or small your HR department is, you can and should consider outsourcing it to a PEO. Whether you have a single human resources manager or a department, you can make processes more efficient and save money by outsourcing.

If you’re a start-up, you can avoid going over-budget with your payroll by using a PEO. If you’re an established company, you can avoid adding more human resources team members to your payroll by allowing a PEO to take on the extra work as your company grows.

Another benefit of outsourcing is you lower your risk of being penalized for non-compliance. These are some of the ways businesses can get into trouble:

  • Payroll issues
  • Problems with benefits
  • Policy difficulties
  • Recruitment problems
  • Retention problems

If you are experiencing any of the above difficulties, a PEO can help you get back on track. The potential to save on fines and fees alone makes outsourcing a sound investment.

A PEO is generally less costly than an in-house human resources department, and they are experts in what they do. You can rely on them to identify problems and handle them as they arise.