How to Choose a PEO Company

Posted on: November 28th, 2022 by webolutions

As a small business owner, you have a lot to keep track of. Some of these items are critical to be kept in-house, while others may be able to get outsourced to free up your team to focus on the tasks which are most essential to the growth of your business. While HR matters may be easily handled by your team at first, your company may eventually experience enough growth to where this becomes a sensible area to outsource.

Partnering with a professional employer organization (PEO) is an easy way to ensure your HR matters are handled correctly without tying up valuable in-house resources on these tasks. For many small businesses, a PEO company can provide the HR support that is typically only possible at large companies. You can experience a wide range of benefits, including:

More competitive benefits packages – PEO companies give small businesses access to better health plans, retirement packages and other benefits at a more affordable cost than can typically be found at a company with a small number of employees.
Payroll administration and processing – Managing payroll can be a headache. PEO companies can handle this task for you, giving you peace of mind that it will run smoothly and your employees will always be paid on time.
Legal compliance – PEO companies stay on top of all state and federal regulations, and they will make sure your business avoids potentially costly HR compliance issues.
Better talent acquisition – Your PEO company can handle your recruitment, hiring and onboarding of new employees, helping you attract the top talent and set new team members up for success.
Fewer administrative tasks – When you partner with a PEO company, you will be able to offload a wide range of time-consuming administrative tasks associated with running your business.
Better employee engagement – An inspired team is a productive team. Your PEO company can help you establish a company culture that provides a great place to work and maintains optimal employee engagement.

Choosing the Right PEO Company Is Critical

While you can reap a wide range of benefits from working with a PTO company, it’s crucial that you choose the right partner. If your PEO company isn’t the right fit for your company culture or isn’t financially stable, it can have a devastating impact on your business. For this reason, you should always spend time researching your options and carefully evaluating any potential PEO companies prior to working with them.

The following steps will help ensure you get this important decision right.

Check the PEO Company’s Licensing and Accreditation

Reputable, high quality PEO companies complete a variety of state and federal licensing and accreditation. When researching a PEO firm, check for the following:

State licensing or registration – Verify that the PEO company has an active license or registration in each state where your business has employees.
Local and state chambers of commerce – Make sure your PEO company is in good standing with the chamber of commerce in the locality where your business resides.

Check References

It’s always a good idea to ask for references anytime you partner with another company. This will give you a sense of the level of service you can expect to receive. Ask for the contact information of several current clients you can use as a reference. Make sure this list includes both newer clients and long-term clients. This will give you a sense of what to expect when you first start working with the PEO company as well as how this relationship develops over time.

Some potential questions to ask these references include:

Why did you choose this particular PEO?
How has this PEO company helped your business?
What are the strengths and weaknesses of this PEO company?
Is there anything you wish you had known about before you began working with this PEO?
Do you plan on partnering with this PEO company long term? Why or why not?

Research the Company History

Spend some time looking into the PEO’s history and background to get a better understanding of how they will align with the culture you’ve established at your company. Some items to research include:

How long has the company been in business?
How long has the current leadership team been in place?
Where is the company located? Do they have offices in other states?
How many clients do they work with?
What is the PEO’s company mission?
What are the PEO’s purpose and core values?
Do their staff have any credentials or areas of specialization?
Does the PEO company have HR professionals in your location? If not, what kind of response time should you expect in the event that you need onsite assistance?
How many clients does each account representative handle?

Research Areas of Specialization

Some PEO companies focus on specific areas, such as payroll management or employee benefits. Others provide more comprehensive HR consulting services that can address a wide range of needs. Make sure you choose a PEO company whose breadth of services aligns with your specific needs.

Assess the PEO’s Financial Strength and Security

Your PEO company will be responsible for accounting tasks and managing financial packages such as retirement plans. Researching the financials of the company is an important step to limit your risk of choosing a company that may not be financially viable long term.

Check the following:

Are the PEO company’s financial statements independently audited by a CPA?
Have their risk management practices been independently certified by the Certification Institute?
For publicly traded companies, view their audited financial statements online.
For privately owned companies, ask them to provide a copy of their most recent audited financial statements.

PassioHR Provides Comprehensive PEO Services to Elevate the Success of Your Business

PassioHR is a full service PEO company dedicated to helping your business grow and thrive. Our unique Elevated Engagement Plus® Approach is focused on enabling you to create a more successful and inspired organization. We accomplish this by taking the time to understand the unique needs of your business, your overarching goals and the company culture you’ve created. This information helps us create a custom program to achieve the ongoing growth and success you desire.

With a broad spectrum of PEO services, you can choose the specific items most critical to your success. We can assist you with all of the following:

Create Successful Teams

Full PEO Services creating inspired, successful teams and comprehensive employee engagement.

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