What are PEO companies?

Written by ShawnTe Pierce

Being a small business owner means you have a lot of tasks on your plate. As you attempt to grow your business, you really don’t have the time to tend to administrative tasks like human resources activities. HR management can be very daunting and extremely time-consuming when you have to focus on other areas of the business. This is when the answer to the question, "What are PEO companies?" can be of great help

Understanding what PEO companies are

A professional employer organization (PEO) is a company that takes over the administrative tasks for another business or client. Under a contract, the PEO company becomes the employer of record. As your co-employer, they’re contracted to provide services for your employees while you maintain control of your business. The PEO’s job is to handle the HR role so you can focus more on operations, production, and revenue-earning endeavors.

Things to look for in a PEO

Before searching through PEO companies, a business should perform a self-assessment of its organization to determine what its human resources and risk management needs are. Since you have to enter into a contract with the PEO for the services it will render, you need to be specific about what is needed.

A few traits to keep in mind when comparing PEO companies:

1. A demonstrated adherence to industry professional standards.
2. The competency level of the company's staff and if they can adequately perform the marketed services.
3. Find out if the PEO is independently audited for both financial record keeping and maintaining employee and client security/privacy.
4. Learn if the PEO been independently certified by the Certification Institute and are its business practices accredited by the Employer Services Assurance Corp.
5. Is the PEO a member the National Association of Professional Employer Organizations (NAPEO), the national trade association for the PEO industry?
6. Become aware of how the employee benefits are funded, if the PEO is insured and at what level, who its third-party administrator is, and if it is licensed in your state.
7. Research how benefits are set up and if they fit the needs of your workers.
8. Research if the PEO meets all state and federal requirements for operating as an employee leasing company.

After you’ve done this research, set up a meeting with each prospective company. During your meeting, ask for personal and professional references. In addition, request to review a copy of the service agreement you would enter into should you choose the PEO. Make sure every detail is clearly defined, and understand all provisions and guarantees to make sure a company fits your needs.

To start setting up meetings with PEO companies, submit a free BuyerZone request for quotes form. We’ll connect you to multiple providers who can answer the question: what are PEO companies, and what can they do for my business?