PEOs offer the peace of mind that comes with the expertise of a full-service HR Department
Payroll, benefits, HR, tax administration, and regulatory compliance assistance are some of the many services PEOs provide to businesses across the country. Companies that work with a PEO grow faster, have lower employee turnover and are 50% less likely to go out of business.
3 Ways small businesses benefit from using a peo
- They grow more than 7% faster than small businesses overall
- Their employee turnover is over 10% lower
- Average cost savings for employers using a PEO is $1,775 per year/per employee
3 Ways a peo helps employees of small business
- Assistance from HR Professionals
- Access to employee benefits
- Increased participation in retirement savings plans
What is a PEO?
A Professional Employer Organization (PEO) is a company which contractually assumes and manages critical human resource and personnel responsibilities and employer risks for small to mid-sized businesses by establishing and maintaining an employer relationship with worksite employees.
How does a PEO arrangement work?
In the relationship between a PEO, a worksite employee, and a client company, there exists a co-employment relationship in which both the PEO and the client company have an employment relationship with the worker. The PEO and client company contractually allocate traditional employer responsibilities and liabilities. The PEO assumes responsibility and liability for the “business of employment” such as human resource compliance, and payroll and employee tax compliance. The client company manages the employees, and all other facets of its business, such as production, marketing, sales, and service. The PEO assists the client in developing a complete human resource and employee benefit package.
Why would a small or medium size business use a PEO?
Business owners want, and need, to focus their time and energy on the “business of their business” and not on the “business of employment”. As businesses grow, owners don’t have the necessary human resource training; payroll and accounting skills; knowledge of regulatory compliance; or backgrounds in risk management, insurance and employee benefit programs to meet the demands of being an employer.
“Our no. 1 asset is our experience” – William Bellis, Owner Ahead Human Resources, Inc.
How many Americans are employed in a co-employment PEO arrangement?
It is estimated PEOs provide services to 175,000 small and mid-sized businesses, employing 3.7 million people. There are 907 PEOs in the United States. The PEO industry’s 175,000 clients represent 15% of all employers with 10 to 99 employees. Between 2008 and 2017, the number of worksite employees employed in the PEO industry grew at a compounded annual rate of 8.3%. This is roughly 14 times higher than the compounded annual growth rate of employment in the economy overall during the same period.
How do I benefit from Ahead Human Resources economies of scale?
Lower cost! We amortize our cost over our large number of employees resulting in reduced cost to you for 401K, employee manuals, direct deposit, payroll processing, 125 plan, claims processing, etc.
How can Ahead Human Resources reduce my employee turnover?
By providing services like low cost comprehensive benefit plans. By increasing employees’ take home pay through pre-tax cafeteria 125 plan, pre-tax dependent care plan, and tax deferred 401K plan. More importantly, employees appreciate the professionally administered, employee-friendly, service and assistance programs, employee payroll services, and conveniences such as direct deposit, employee manuals, etc.
According to a recent study by noted economists Laurie Bassi and Dan McMurrer, small businesses that use PEOs grow 7 to 9 percent faster, have 10 to 14 percent lower employee turnover, and are 50 percent less likely to go out of business. (Why use a PEO – NAPEO.org)
Can a 125 Plan and 401K Plan increase my employee's take-home pay at no cost to me?
Yes! Not only can your employees take home more pay at no cost to you, incredibly your cost will be lower as well. The 125 Plan allows employees to purchase health, dental, dependent care, life, and supplemental benefits pre-tax. (Federal and State) Additionally, neither the employee nor the employer pay FICA or FUTA on 125 Plan purchases. Not only do the employees increase their take home pay, the employer saves 8.45% on FICA and FUTA on those contributions. The 401K Plan allows employees to defer taxes (Federal and State) in a qualified retirement plan.