Professional Employer Organization: What Small Businesses Need to Know

A professional employer organization can help small businesses refocus their time and resources back to their core business.

From marketing to human resources to operations, there are always seem to be endless tasks that need to be accomplished when it comes to running a business, especially a small or mid-sized business. With so much on their plates, business owners often struggle with personnel administration requirements and find these aspects of their business too complex and time-consuming. The good news is there are organizations ready to help with these functions: professional employer organizations.

What is a Professional Employer Organization and Who Should Use Them?

Professional employer organizations, also commonly referred to as PEOs, provide a variety of human resources and administrative services to small businesses. The type of services offered varies by company but can include payroll processing, handling workers’ compensation coverage and claims, compliance assistance for federal and state labor and employment laws, and administering benefits.

Professional employer organizations are best suited for small and medium-sized businesses that do not have the means to focus on personnel administration requirements internally. According to the National Association of Professional Employer Organizations (NAPEO), approximately 173,000 small and mid-sized businesses currently use professional employer organizations.

While small and medium-sized businesses within every industry use professional employer organizations, common sectors include construction, landscaping, industrial, healthcare, and nonprofit.

How does a Professional Employer Organization Work?

When a business enters into a professional employer organizations services arrangement, they become the ‘worksite’ co-employer of their company’s existing and future workforce. The professional employer organization becomes the ‘administrative’ co-employer. They assume responsibility for the majority of the human resource management responsibilities and related administrative responsibilities.

Businesses that work with a professional employer organization do not lose control over their business and remain responsible for day-to-day assignments, supervision, recruiting, training, and overall business operations.

What are the benefits of a PEO?

Professional employer organizations’ many benefits include cost-savings, time savings, increased benefit options, improved functionality, and peace of mind. By outsourcing various aspects of their business to a professional employer organization, clients can reduce their administrative and risk-related work and focus on running and growing their business.

Overall, professional employer organizations help companies grow faster than those that do not use them. According to the NAPEO, “businesses in a PEO arrangement grow 7-9 percent faster, have 10-14 percent lower turnover, and are 50 percent less likely to go out of business.”

Is a Professional Employer Organization the Right Fit for your Business?

If you’re struggling with the administrative side of your small business, including payroll processing and workers’ compensation coverage and claims, Convergence Employee Leasing is ready to help. For more than a decade, our dedicated team of professionals has provided professional employer organization services to small and medium-sized businesses throughout the state of Florida, as well as Georgia and Alabama.

We understand what small business owners need because we’ve witnessed the struggles of these businesses first-hand as they’ve tried to navigate the managerial side of things on their own. Contact us today to discuss your business’s needs and discover how we can help.