Find the Right PEO - Four Criteria

All business owners are familiar with the added tedium and frustration that follows in the wake of hiring an employee. From day one, the stresses of payroll management, taxes, insurance, and pesky governmental mandates serve as constant reminders of the risks involved in being an employer. Worse yet, these added tasks do little but stymie progress, as they hold the business owner back, forcing him or her to spend less time working to expand and grow the company, and more time engaging in the vapidly monotonous world of paperwork.

There’s an app for that…or rather, a PEO. The Professional Employer Organization exists to relieve the business owner of these burdens so that he or she can focus on augmenting the company’s productivity. 

PEOs, once referred to as employee leasing companies, thrive in the free market economy of the United States. For the business owner, this is a beautiful thing. With hundreds of PEOs specializing in a myriad of different disciplines, there are a lot of options to comb through to discover the one that is perfect for you. True, this in itself can be a bit of a bother, but it’s all worth it in the end. Finding the right PEO is like piecing a puzzle together. When the puzzle is completed and the right PEO has been found, the company is effectively equipped to follow along the path to a bright and successful future. 

PEO matching process is really not that bad. Every PEO has certain constraints on the types of clients it can accept. In finding YOUR perfect PEO, first weigh the options against the following four criteria: 

1) Geography
2) HR Services
3) Health Insurance
4) Workers’ Compensation

This one is simple enough. Each PEO has a different license, meaning that different PEOs are legally permitted to accept clients and conduct their affairs in different geographical areas. Although some states do not require PEO licenses, over half of the United States does. You can narrow your list of potential PEOs down by cross-referencing it with a list of PEOs operating legally in your area. As a side note, keep in mind that even if a PEO is headquartered in one state, it may also be licensed for another.

HR Services
What human resource services does your company require? PEOs tend to offer a baseline price quote to potential clients. Sometimes, there may be hidden charges, many of which are for services not even utilized.  For this reason, investigate your list of PEOs to determine how extended services are charged, to ensure that you are spending your money wisely.

Health Insurance
To the small business owner, the underworld of insurance is a scary place. This attitude is understandable. Here, the devil is truly in the details, as even an infinitesimal issue in an insurance plan can result in a significant headache for the business owner. For this reason, many PEOs offer access to a master health plan, under the umbrella of which all your employees can be covered. In picking the best PEO for you, identify the strongest health insurance providers in your area, and go over your list of PEOs to see which ones offer plans from these carriers. You may also want to check area hospitals, and which carriers they accept. Then check out pricing and determine the most affordable, effective plans possible.

Workers Compensation
Every PEO has a master workers’ compensation insurance policy for all of their clients; therefore due to various limitations and exclusions within this policy, some clients cannot be insured. Obviously, depending on the inherent risk factors of your business (i.e. high risk structural contractor vs. low risk department store vendor), there will be different policies offered by different PEOs. This narrows down the list and further allows you to match up with the right PEO – for YOU. 

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