Full-Service HR

5 FAQs About PEOs

Ella Baker
5 FAQs About PEOs
Reading time 7 Mins
Published on Aug 20
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Helping you better understand how a PEO partner can help you

When it comes to selecting potential partners or vendors for your business, it’s natural to have lots of questions. Taking the time to learn more about the work and services that a professional employer organization (PEO) can offer your company is a first step to providing your employees with better benefits, streamlining your payroll structure, allowing you to focus on growing your business, and so much more. Don’t be intimidated by industry terminology laden websites or overly complicated terms of service – here are the answers to the five most frequently asked questions about PEOs.

FAQ 1: What is a PEO?

A PEO is a firm that provides comprehensive HR solutions to employers. PEOs partner with small and mid-size businesses to provide outsourced HR management, including employee benefits administration, risk management, compliance with regulatory issues, and training. Through the co-employment model, PEOs are able to provide businesses with:

• Human Resources (HR) Management
• Benefits Administration
• Payroll Processing
• Time and Labor Management
• Tax Administration
• Better rates on Worker’s Compensation
• Safety and Risk Management
• Employee Relations Support
• Ensure ACA Compliance
• Ensure Labor Law Compliance

FAQ 2: What services do PEOs provide?

Your PEO will administer payroll functions, including automated deposits, payroll tax filings, and even vendor and contractor payments. You decide the pay rate and classification of your employees and the co-employer will make sure that you stay compliant with all federal, state, and local payroll filings and pay rates. When there are changes to regulations regarding filing requirements or rates of pay, your PEO will notify you and help you make the necessary changes to remain compliant.

In addition, your PEO will also offer compliance support for government tax and reporting forms. These include employer payroll tax filings, W-2s and 1099s, COBRA forms, EEO-1, and others. Removing these types of time-consuming tasks from your hands allows you to focus on the overall management of your business.

Your PEO will also manage employment-related risks. Unemployment and workers’ compensation claims are a fact of life in business, but your PEO will take on the burden of administering these tasks for you. When an unemployment claim is made, your PEO will handle the paperwork and follow-up. If a worker is injured on the job, your PEO will manage the entire process from reporting to return-to-work, even staying in contact with the medical provider to ensure that employees are assigned duties that fit with their current fitness for work level. In the event of an employee lawsuit, the PEOs EPLI coverage extends to you, providing additional safeguards for your business.

Finally, and perhaps most important to your employees and potential job candidates, your PEO will provide benefits administration for your company. By harnessing the buying power of their entire client pool, PEOs are able to offer you access to high-quality benefits packages that may otherwise be unaffordable to many small or mid-size businesses. Your PEO will help with every aspect of the benefits administration, such as benefits onboarding, withholdings, claims management, and other related paperwork.

FAQ 3: What is co-employment and how does it work?

The National Association of Professional Employer Organizations states that co-employment is the contractual allocation and sharing of employer responsibilities between a PEO and its client. Under a co-employment agreement, employees are technically employed by both you, the business owner, and the PEO, or co-employer.

You handle all daily duties and core job functions of your employees and you make all decisions about which applicants to hire and which employees to dismiss. The PEO does not supply or make decisions about your workforce; instead the co-employer supplies services and benefits to you and your workforce. You maintain control of all of your business decisions and operations, while the PEO manages employee-related responsibilities like payroll, benefits, and HR administration.

Business owners who align with a PEO in a co-employment relationship transfer a substantial portion of the risk and responsibilities associated with employees to the co-employer. The structure of the relationship allows your PEO to offer better benefits and benefit options, handling of wage and employment tax responsibility, freedom from the responsibility of reporting, collecting and depositing the taxes with state and federal authorities, and assistance with workers’ compensation coverage and claim management.

FAQ 4: Are PEOs expensive?

When entering into any business relationship, it’s understandable and expected that you would be concerned about costs. With the economies of scale and liability protections a PEO provides, in most cases the arrangement is effectively cost-neutral, sometimes even less expensive, than managing compliance and HR duties on your own.
Due to their size and the employee base they represent as the employer of record through the co-employment relationship, PEOs are able to receive cheaper insurance rates for your employees than you would be able to obtain on your own. These deep discounts aren’t available to most small businesses as their employee bases aren’t substantial enough to qualify. Additionally, you won’t have to allot time in your or your supervisors’ busy schedules to administer the plans as the PEO will handle those tasks for you – freeing you up to invest more time in critical business activities.
The expertise in providing these services that a PEO is able to offer means less time spent researching benefits for your employees, cost containment of workers’ compensation insurance and claims, time and money saved dealing with compliance issues, less time spent on payroll administration and tax compliance, and, best of all, increased employee retention. Through economies of scale, increasing your company’s efficiency, and helping you grow, PEOs are often able to produce benefits that far exceed the cost savings that they offer to your company.

FAQ 5: How can a PEO help my company and employees?

Small businesses that use PEOs grow 7 to 9 percent faster, have 10 to 14 percent lower employee turnover, and, most importantly, are 50 percent less likely to go out of business than those who do not utilize HR outsourcing services. Your mid-size business is growing, but the stresses of managing the human resources process is becoming more and more of a distraction. Working with a PEO is an investment in your business’ future, ensuring that you are able to provide your employees with the benefits they deserve while providing valuable you with time-saving and liability-reducing services.

Sheakley’s PEO solutions deliver top notch human resources services without the necessity of an HR manager on your team. The technology tools offered by Sheakley allow for easier management of your employees PTO, vacation, check stubs and W-2s. The training and on-going education opportunities Sheakley offers to your supervisory staff will ensure that the day-to-day management of your business remains compliant. The PEO team can help you avoid common HR mistakes that could prove costly to your business.

Let Sheakley meet your HR needs

Accredited by Employer Services Assurance Corporation (ESAC), Certification Institute, and backed by a $3 million Employment Practices Liability Insurance policy, Sheakley’s 120 years of combined PEO experience and expertise are unrivaled in the industry. As your company continues to grow and become subject to more stringent labor laws, Sheakley’s PEO services allow you to remain compliant and focused on the daily demands of your business.

Schedule your free consultation with a Sheakley PEO professional today. For more in-depth information about PEOs, download our What is a PEO e-book today. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media. Join in the discussion by commenting below.


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