Small businesses have a lot to deal with as they are starting up and beginning to grow. What may have started as a one-man show now has employees and benefits to sort out. Wouldn’t it be great if there was someone who could help them with all of the administrative tasks that are daunting and time-consuming so they can focus on productivity?
The great news is there is! Professional Employer Organizations, or PEOs for short, are companies that are contracted to control all of the human resource functions for SMBs. They work hard at managing everything, so the small business owner doesn’t have to do it themselves or hire someone to manage it.
The Cost of Employees
Let’s face it, hiring employees is expensive. You have the recruitment costs, the costs of onboarding and the time lost to train the employee. Additionally, you have a competitive salary and full benefit package to offer if you want to attract the right employee. While having a stellar, seasoned employee is great, you are out a lot of money on just one person. If that person leaves, you have to start all over again and incur the cost again and again each time that employee needs replaced.
With a PEO, you have industry experts at your fingertips managing the human resource functions for your small business at a fraction of the cost. There are no salaries that need paid, not benefit packages to offer, and if that employee leaves, they are immediately replaced with someone of the same stature without missing a beat.
All of this money saved can be funneled into another aspect of the company, helping it to grow. Additionally, the time saved from new hire onboarding means more productivity for the small business owner and a chance to focus on something that could be more beneficial to the company.
Maintaining Compliance Can Be a Struggle for SMB
Remaining in compliance can be a struggle for SMB owners that aren’t as familiar with the laws that are out there. In an ever-changing legal environment, compliance laws are changing by the hour it seems. So how does a small business owner stay on top of everything while trying to successfully run his business? He leaves it up to the PEO.
These experts are watching the changes coming and are usually aware of them before they become laws, thus giving them time to look into each company’s policies and procedures to make sure if correctly followed they are in compliance.
Couple that with handling all of the tax filings, unemployment insurance filings, maintaining the correct liability insurance and handling worker’s comp claims and one contract with a PEO would have quickly turned into multiple employees if the job was kept in-house.
Say Goodbye to Paperwork
Paperwork can be the downfall of a company when it comes to organization. If there is not a good mitigation procedure put in place, it can get out of control and can take hours to sort through and file properly. Additionally, SMBs need a place to store all of this paperwork, most of it required but then not touched after its initial need.
Using a PEO eliminates this paperwork. All new hire paperwork is handled with the PEO and then placed into online storage so the small business can retrieve it if it is ever needed, but it does not take up prime real estate in any offices at the business. Being able to quickly reference it from anywhere is an added bonus because if a CEO is working at night on something and needs an employee’s information quickly, it is right there at his fingertips.
Additionally, documents like the employee handbook and code of conduct are handled by the PEO as well, so when the employee walks in the door for their first day of work, there is nothing that needs to be filled out or signed and they are ready to hit the floor running.
Why is a PEO the Better Choice for SMBs?
With all of those highlights on what a PEO can do for a small business, there should be no doubt that a good Professional Employer Organization is the best route for a small business to take to handle all of their human resource needs. Studies show, as reported by Quick Sprout, that 68% of small businesses that utilize PEOs are more successful than their counterparts.
Hiring a PEO to work for you gives you the time to devote to areas of your business that can increase profitability and productivity and can help take you to the next level while still having some of the most talented individuals in human resources working with your business.
Because of all the benefits and the small cost they bring, a PEO is a better choice for small and medium sized businesses.