A Professional Employer Organization is a company that provides outsourced services to businesses. For example, a business can hire a PEO employee for management tasks such as benefits administration, recruiting, and payroll. For tax purposes, the PEO is the employee's official employer.
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Why We Chose ADP:
ADP is IRS-certified and offers a range of services, including co-employment and employee leasing arrangements and cloud-based software. Their software can help companies with their payroll, benefits, training, risks, compliance, and talent management.
ADP offers a wide range of integrations, such as with accounting, ERPs, time and attendance, recruiting and onboarding, learning, benefits administration, employee benefits, productivity and collaboration, and point of sale solutions.
Users of ADP can choose between HR outsourcing or co-employment for their outsourced service needs. They also offer easy-to-use mobile apps and a rich employee benefits package.
Things to Consider When Evaluating Professional Employer Organization Firms:
- Several state licensing laws and regulations require PEO firms to have audited financial statements, so make sure the company you choose demonstrates responsible financial management.
- Determine the level of support you would get and whether you will be charged extra to speak with a live representative or if you will be directed to a call center where you would speak to a different person each time. A dedicated support team would be the best option.
- Look at the breadth of the benefits plan and how it is tailored to see if it fits your company's needs.
Best Professional Employer Organization Firms:
Easy to use, IRS certified, no long-term contracts.
Feature packed, multi-purpose tool for small business.
Similar features to ADP, but longer term contract required.
Great payroll and tax administration, includes most features.
Solid overall, but missing key hiring support features.
Offers payroll processing, risk mitigation, and HR strategy tools, but missing a few key features.
Solid hiring support, but missing some key payroll and risk/compliance management features.
Great hiring support, but lacking in integrations and payroll services.
Missing some key features, not accredited by the Employer Services Assurance Corporation.
Missing a number of payroll and benefits features.
Professional Employer Organization Pros and Cons:
Employee benefits at lower costs.
Less control over employees.
Greater business efficiency.
The PEO will constantly assess the cost-benefit of working with you.
No more administration-heavy HR responsibilities.
Your business has new costs when working with a PEO.
What is the best PEO?
How much do PEO companies charge?
Everyone has different prices, but, generally speaking, PEO services range from $750.00 to $1,500.00 per employee per year.
What is a certified professional employer organization?
"Certified" means that the PEO is certified by the government and any other applicable regulating bodies to provide outsourced employer services.
Who is the employer in a PEO?
When a company works with a PEO, any workers hired by the PEO are actually considered employees of the PEO.
What is the difference between employee leasing and a PEO?
PEOs supply businesses with services and benefits and do not supply employees to work sites. Employee leasing is a service that supplies employees to a business and those employees return to the staffing service for reassignment upon completion of their work at that business.
How does a PEO make money?
- Fees that small businesses pay directly to PEOs.
- Commissions from insurance companies.
What is a professional employer organization (PEO) company?
Professional employer organizations (PEOs) provide HR services for small business and may also provide employees with access to 401(k) plans, life, dental and health insurance, dependent care, and other benefits not typically provided by small businesses.
Is a PEO right for my company?
This depends on the HR needs of your business. Businesses with difficulties in their hiring and employee management processes could use the services of PEOs, especially if the business has a high turnover of employees.
What is professional employer organization insurance?
PEO insurance is liability insurance for your business that is purchased and managed by your PEO (professional employer organization). The advantage of PEO insurance is that you can access it at a discounted rate.
Are there any international professional employer organizations?
Can a PEO perform all of our payroll responsibilities?
Yes. With professional employer organization payroll services, you don't have to worry about any of the payroll administration in your business. From direct deposits to expense reimbursement and year-end statements, a PEO can take care of your entire payroll system.
Why use a PEO?
Using a PEO can help your company get better benefits, especially insurance, by pooling with other companies. It can also save you time on benefits administration, recruiting, and payroll.