The Value of a PEO for Small Business

Small businesses are a vital part of our economy. Entrepreneurs bring a personal twist to the marketplace with innovative products and services based on their unique talents and interests. As a market segment, small businesses make up 44 percent of the US gross national product. There are 32 million small businesses in the United States. Small businesses hit every sector, from construction and manufacturing to retail and professional services.

The SBA defines small businesses as those having fewer than 500 employees, but the majority are much smaller than that. It is not uncommon for sole proprietorships to grow to become employers. In 2021, these small businesses accounted for more than 60 percent of new jobs.

Innovation drives demand for products and services which drives growth. But visionary small businesses can experience growing pains as the talented, skilled, and passionate owners take on more and more administrative tasks – sometimes leaving them longing for a time when their business was smaller and more hands-on. A professional employer organization (PEO) may be the solution for smart growth for your small business.


How a PEO will Help Your Business Grow

A PEO provides payroll, benefits, HR, tax administration, and regulatory compliance assistance to businesses. PEOs are a unique service offering. PEOs partner closely with businesses, sharing the responsibilities of human resources with the client business. In this relationship, the PEO is the employer of record and handles all administrative and compliance matters while the small business retains the hiring, development, and supervision of employees. Here are a few ways that a PEO can support your business’s growth.

A PEO can ensure that your business is prepared for the increased compliance requirements that come with growth. The regulatory and legal framework that businesses operate under an increase in complexity as your employee roster grows. The first big leap is the evolution from a sole proprietorship to an employer but there are other stages that are of note.

Once you hire your first employee, your business has new regulatory requirements. These include tax withholdings, fair labor standards, and immigration requirements. With 15 and 20 employees, your business will be held to higher standards for anti-discrimination. At 50 or more employees, FMLA kicks in. These are just a few of the regulatory requirements. In fact, businesses are required to understand and comply with hundreds of federal, state, and local laws and regulations.

A PEO will be able to ensure that your policies and procedures, hiring practices and termination processes all meet requirements.

A Professional Employer Organization can help reduce your business’s liability. Human resources noncompliance is a significant risk to small businesses. Noncompliance can result in hefty penalties and damage your company’s reputation. Your business could also be at risk of costly lawsuits and settlements. The PEO relationship mitigates those risks by having an experienced partner handle the HR business functions that are higher risk.

A PEO will allow you to offer your employees attractive and competitive benefits packages. Most small businesses simply don’t have the buying power to secure attractive and competitive benefits for their employees. This puts the small business at a disadvantage when competing and retaining valued employees. When you contract with a PEO, they are the employer of record. They leverage the pooled buying power of the small businesses they contract with which allows your business to be able to offer your employees world-class benefits. Your employees can thrive in the unique innovative atmosphere that many small businesses offer while not sacrificing important benefits.

Letting business owners focus on what they love. Like many small business owners, you started your business to do what you love. You may envision mentoring your employees so that your innovations are built upon. But growth may be keeping you from your passion. You may be spending a disproportionate amount of time ensuring compliance, recruiting, and retaining employees, and negotiating with insurance companies for benefits packages. When you partner with a PEO, you turn over those tasks to a trusted partner. The results are extraordinary. The growth of small businesses working with a PEO outpaces peer businesses by 7 to 9%.


Contact Us Today

Is your small business poised for growth? TANDIUM Corporation’s knowledgeable staff can help you determine if partnering with a Professional Employer Organization is right for your business.

TANDIUM Corporation specializes in serving the Human Resources, Payroll, and Benefits needs of small and medium-sized businesses. Contact us today to schedule a free initial consultation.