Top Reasons PEO Can Help you Save Money and Time

August 1, 2024

Today, many businesses have opted for PEOs, or Professional Employer Organizations to outsource their company’s HR needs and responsibilities. Most of the time, a PEO acts as a co-employer that is contracted to manage important HR functions. 

For most business owners, in-house HR compliance can be a daunting and time-consuming task. However, with a PEO, challenges such as managing payroll, administering employee benefits, ensuring compliance with labor laws, handling workers’ compensation claims, and most importantly, ensuring overall employee satisfaction is taken care of. 

As a business, whether you’re a startup or a large corporation, opting for a PEO can bring several advantages, saving you money and time. Here are some key benefits to consider.

Payroll Efficiency 

In a study published by The Society for Human Resource Management (SHRM), it was revealed that in-house payroll costs a typical company of approximately 1,000 employees $16 per check, while those who opted for PEO only spent $10 per check. That’s about 35% in savings. 

Additionally, in 2019, a study conducted by the National Association of Employer Organizations (NAPEO) found that the estimated expected return on investment (ROI) for PEO clients was 27.2%. These cost savings and ROI benefits underscore the financial benefits that businesses can potentially gain by partnering with a PEO. 

With a PEO, you no longer require full-time, in-house staff dedicated to preparing the payroll or administering benefit packages to employees. PEOs are dedicated to staying abreast of frequent changes in tax laws and employment processes, safeguarding your payroll processes with meticulous compliance measures. Everything from tax calculations, wage laws, and overtime rules, a PEO’s payroll outsourcing services are on top of it. This gives you more time and money to focus on growing your business while your trusted PEO partner works on enhancing your operational efficiency. 

Compliance 

PEOs are known to specialize in HR outsourcing/management, and hence, they have to stay updated with the ever evolving employment laws and regulations. While you may think running your own business gives you the freedom to set your own rules, it doesn’t mean you’re free from federal laws and regulations. Non-compliance can lead to serious repercussions, including financial penalties, legal liabilities, and potentially damage your business’s reputation. While it is crucial to prioritize these adherence measures, in the midst of running your business, it may just slip your mind. 

Laws such as the Fair Labor Standard Act (FLSA) have set standards for minimum wage, overtime pay, recordkeeping, and employment of minors. Other regulations, like the Occupational Safety and Health Administration (OSHA) and Workers’ Compensation Laws, further protect workers’ rights and ensure fair treatment across industries. 

Therefore, partnering with a PEO that specializes in regulatory measures will ensure that your business is well ahead of all these laws and compliance measures. Through conducting regular risk inspections, a PEO can identify potential hazards proactively, helping your business avoid fines while also enhancing workplace safety and regulatory compliance. 

Over time, not only will your business experience a lower risk profile, but it will also produce more savings by avoiding unnecessary lawsuits and worker compensation claims. 

Training & Development 

A lesser known fact about PEOs is that they also offer comprehensive training programs and solutions for employees. Reportedly, hiring the wrong person can cost a business up to 30% of the employee’s first-year earnings. Inaccurate job descriptions and inadequate employee screening procedures can lead to ineffective hiring choices and reduced performance outcomes. 

To shield businesses from such repercussions, PEOs provide training programs that encompass a range of critical topics such as HR fundamentals, harassment awareness, and Form I–9 compliance. These training programs are usually customized to meet the specific needs of a business, ensuring a proactive approach towards relevant operational competence. 

Moreover, these training programs do not just end at the employment level. If need be, they can provide ongoing training for both managers and employees. This is to ensure that both managers and employees stay updated on the latest industry trends, best practices, and regulatory changes. This approach contributes to time and cost savings in the long-run. Well-trained managers and employees are then better equipped to handle challenges, mitigate risks, and seize opportunities. 

How ProSource Solutions Can Help you Save Time and Money 

Keen on undertaking a PEO to maximize your cost savings and save time? ProSource Solutions offers a range of PEO services designed to address and mitigate the everyday challenges faced by businesses like yours. Some of the PEO services we offer include: 

As your preferred co-employer, you can focus on growing your business while we handle all the complexities involved in HR administration. At ProSourceSolutions, we’re dedicated to helping you become an ‘Employer of Choice’. We turn your business’s dreams into a reality. 

Posted in PEO