How Can a PEO Support Your Small Business?

Every small business could use a world-class human resources team to effectively take care of all the administrative tasks, stay abreast of the myriad of regulations and compliance issues, reduce risks, and provide strategic consults. Unfortunately, for most small businesses, this level of support and expertise is out of reach.

Small businesses already pay more per employee than their larger counterparts. In fact, according to the Society of Human Resources Professionals (SHRM), human resources expenses per FTE for small businesses are nearly double that of medium businesses ($3,592 compared to $1,897). Often that leads small businesses to budget for baseline human resources demand or divvy up responsibilities between other management and administrative teams. This workaround leaves small companies at a disadvantage when human resources demands are high and needs are complex. Nearly all small businesses will find that their human resources needs exceed these baseline estimates. Fifty-five percent of small businesses are planning on hiring staff this year, and eighty-five percent of small businesses have already faced one HR challenge in the first quarter of 2022.

Professional Employer Organizations (PEOs) are an effective way for businesses to reduce risk and increase their ability to weather HR challenges and peak demand. PEOs provide the platform, processes, and human resources professionals your business needs so that your employees can focus on delivering products and services to your customers. You also have the peace of mind of having a trusted partner who can handle both the day-to-day needs and peak demand.

What Does a PEO Offer?

PEOs are the employer of record for tax purposes and are responsible for collecting and paying payroll taxes, but PEOs offer more than that. Your business and the PEO are co-employers, and you retain all the workforce decisions for your team while the PEO manages the administrative tasks. Because a PEO is also the employer of record for other companies, PEOs have access to better employee benefits in the marketplace, including retirement plans.

A quality PEO provides personalized services to help your business reach its goals. Some common services include:

  • Payroll processing
  • Collecting and paying payroll taxes
  • Benefit negotiation and selection
  • Benefits administration
  • Human Resources consulting and strategy
  • Employee HR training
  • Workers’ compensation and protected leave administration
  • Employee recruitment, onboarding, and retention
  • Employee separation including COBRA, severance, and unemployment

The Benefits to Small and Medium Sized Businesses are Significant

  • PEOs ensure compliance with all employment and tax requirements, reducing risks and liability for your business.
  • The PEO provides the technology, processes, and professionals for smooth operations, reducing frustrations and expensive missteps.
  • PEOs often reduce the cost per employee while increasing the quality of services and reducing risk. According to NEPEO, the average savings is around $450 per employee. The ROI of using a PEO (in cost savings alone) is 27.3%.
  • PEO clients handle the unexpected better. During the COVID pandemic, PEO clients were 58% less likely to close their doors permanently, 82% more likely to have returned to pre-pandemic levels or better, and are hiring more employees than other small and medium-sized businesses.
  • Partnering with a PEO allows you and your employees to focus on the activities that bring value to your customers and set the conditions for growth.
  • PEO supports expansion into new regions, ensuring that local regulations and requirements are met.
  • PEOs have buying power and can offer employees the full spectrum of benefit options, including 401(k) plans, health, dental, life, and dependent care. These capabilities give PEO clients a unique advantage in a tight labor market: employees can enjoy the culture and connection that small businesses offer while not sacrificing essential benefits.
  • Employee satisfaction is high, and there is less turnover. The institutional knowledge of valued employees stays with your business.

Partnering with a PEO supercharges small businesses and creates an environment where the company and employees thrive. Studies show businesses that use PEOs grow 7 to 9 percent faster, have employee turnover that is 10 to 14 percent lower, and are 50 percent less likely to go out of business than companies that do not use PEOs.

Contact Us Today

Join the thousands of small businesses thriving in PEO partnerships. Contact us to find out if you can partner with TANDIUM Corporation to allow you to focus on your core business while increasing employee satisfaction and reducing risk. TANDIUM’s knowledgeable staff will work with you to develop a personalized PEO solution tailored to the needs of your business.