Ask These 8 Questions When You Compare PEO Companies

boy asking questionsIf you’re a small business owner and you need help with HR, take comfort in the fact that thousands of others have faced that same dilemma. HR responsibilities take time, resources, and blood/sweat/tears that you may not be able to invest.

But you don’t have to hire a full-time staff to take on those tasks for you.

When you’re struggling to keep your head above water, a professional employer organization (PEO) may be the best investment you can make in the future of your business. PEOs help you manage the tedious tasks of HR and reduce your liability concerns about compliance and taxes.

But with nearly 1,000 PEOS operating in the U.S., how do you choose the right one? Here are 8 questions you can ask as you compare PEO companies.

Eight Questions to Ask Before You Choose a PEO Company

It’s going to take some research and homework to learn the details about the companies you’re looking at, but the payoff will be worth it. While PEOs often appear similar on the surface, the nuts and bolts of how they operate and what they offer vary significantly.

Ask these questions when you’re in the research stage:

  1. What kind of company and workforce do you have (industry/size)?
    PEOs often specialize in a particular industry or company size, so it’s important to know that the one you choose understands your company’s needs. If you’re a small, blue-collar company you don’t want a PEO that specializes in larger software technology firms.
  2. What credentials does the PEO have?
    Start with basics like how many years they have been in business and how many clients they have served. You’ll also want to verify that their financial statements receive independent audits. Make sure you see documentation that they remit taxes on time and that they have a solid business model in place. Don’t hang your HR hopes on a company that will fold in six months.
  3. Is the company certified by the IRS?
    PEO certification isn’t a requirement, but it does indicate that the PEO has passed the rigorous IRS certification process. Certification does not mean the PEO is more qualified or that they offer better services, but it does mean they have passed an annual CPA audit, received quarterly confirmation of tax payments, conducted employee background checks, and met the IRS standards for surety bonds and client service agreements. If the PEO you are considering is not certified, you should verify all of these things independently.
  4. What is the pricing model?
    PEOs quote their prices differently, so be sure you understand how the quote breaks down. Look for transparent, unbundled pricing that clearly lists all fees and prices for add-on services.
  5. What are their HR credentials?
    Does the PEO company’s HR team have substantial experience in the industry? How do they handle performance reviews, handbooks, separation agreements, and other HR tasks? Make sure the provider’s process works well in your company culture and that you are comfortable with the knowledge and credentials of the team you will be working with.
  6. What is the fine print on their benefits offering?
    Look further than the pricing model. Ask what carriers they work with (avoid state specific carriers if you expect to grow beyond your state borders), what kinds of plans they offer (medical, vision dental), whether they provide voluntary benefits like life insurance or disability, and whether there will be annual pricing increases based on claims.
  7. How does the technology platform function?
    You and your employees will most likely be logging into the technology platform every day to manage time punches, vacation requests, performance reviews, benefits enrollment, and self-service tasks. Make sure the technology platform is intuitive and user-friendly and that it handles all the tasks you need seamlessly.
  8. What do their customers say?
    Look for customer testimonials or reviews online. Remember, a case study provided by the PEO can be helpful, but it’s likely not going to show you any drawbacks or flaws. Get real opinions from real customers before you make your decision.

Make the Right Choice the First Time

If all of that sounds like a lot of research, it is. That’s where we come in. Our PEO Matching Tool is designed to help you narrow down your options and create your short list—no headaches required. Check it out today and find out which PEO company is right for your business!