If you own a small- to mid-sized business, you probably have your hands full at work. Business owners are the brains behind the operation—simultaneously the big dreamer and the detailed-oriented glue that holds it all together. As rewarding as it is to own your own business, it isn’t without its challenges.
Administrative tasks like workers’ compensation, payroll, and other HR services are vital to the success of your business, but managing these tasks has the tendency to eat up a huge chunk of your time. Focusing on your strengths as a business owner can be difficult if it feels like you’re weighed down by the day-to-day.
So what can you do to optimize your time? Professional employer organizations (PEOs) offer support with these essential aspects of your business so that you can focus your energy where it’s best utilized. Keep reading to learn about the strategic advantage of a PEO managing workers’ comp for small- to mid-sized businesses.
Why workers’ compensation is important for small- to mid-sized businesses
Whether you have one employee or one hundred, workers’ compensation insurance is crucial in protecting your workers in the event an accident happens on the job. Workers’ comp can cover medical expenses, rehabilitation costs, and even lost wages while the injured employee is unable to work.
Traditional workers’ comp may seem costly—particularly for a small business with fewer resources—but there are other options available. The benefits of having coverage if someone gets injured at work far outweigh the cost.
Additionally, workers’ compensation not only protects the injured employee financially, but it also protects you as the business owner. If there’s no workers’ comp insurance in place and an employee gets injured at work, you could be responsible for paying out-of-pocket for their medical expenses.
What exactly is a PEO?
Sometimes referred to as a co-employer, a PEO steps in to handle the administrative side of your business for you. As the business owner, you’re still in charge of decision-making, so you aren’t relinquishing control to the organization. Partnering with a PEO simply allows you to outsource aspects of your business like workers’ comp and payroll services, ultimately creating more time for you to focus your attention elsewhere.
Advantages to partnering with a PEO for workers’ comp
When it comes to workers’ compensation insurance, what are some of the strategic advantages to working with a PEO?
PEOs allow you to optimize your time for company growth
Managing workers’ compensation can be tedious and complex. When you partner with a PEO you’ll have the knowledge of experts on your side to help you make the best decisions for both your employees and your business.
When you don’t have to worry about the administrative tasks that are essential to your business, you can focus on the mission of your company. As a business owner, it’s crucial that you rely on your unique skills and strengths for the growth and success of your company. By working with a PEO, you give yourself space to do that.
You could get better coverage for your workers while saving money
PEOs function by grouping all of their clients together so that they can get the best coverage possible for the lowest cost. Depending on your financial situation as a small- or mid-sized business, the traditional workers’ comp plan you find for the same price may not have great coverage.
You only pay for the coverage you need
One of the best things about working with a PEO for workers’ compensation is the flexibility it offers in terms of coverage. Many small- to mid-sized businesses hire short-term employees on a project-by-project basis, and therefore don’t need a plan quite as extensive as traditional workers’ comp.
Pay-as-you-go programs with PEOs allow the flexibility of stopping and starting the coverage whenever it’s needed. Additionally, instead of paying an estimated premium as a lump sum at the start of the year, you can simply pay in conjunction with your payroll—taking the guesswork out of what you’ll owe.
Strategic advantages of working with a PEO
For small- to mid-sized businesses with less manpower and free time, it’s important to know when to outsource. Handing over administrative tasks to professionals could be incredibly advantageous to the growth of your company.
Small businesses help keep their communities thriving, but being a small business owner comes with its challenges as well. If you own your own company, you likely have your hands full with projects and ideas. While handling the day-to-day tasks is necessary to keep your business running smoothly, strategy, creation, and growth are likely areas where you’d rather send your attention.
A professional employer organization (PEO) can manage your company’s administrative tasks like payroll, workers’ compensation, and human resources so that you have more time to focus on what you do best. Let’s take a look at the importance of workers’ comp for small businesses, some challenges that might arise, and how partnering with a PEO can help.
Why is workers’ compensation important for small businesses?
No matter the size of your company, protecting your employees is a top priority. Providing safe working conditions and financial protection for your workers if an injury does occur is imperative for being a great business owner.
Workers’ compensation insurance is required by law in most states. Even in states where it isn’t mandatory, however, it’s still a good idea to have coverage in place.
If an incident happens on the job, workers’ compensation insurance can cover medical bills, rehabilitation costs, and lost wages. For you as a business owner, workers’ comp can help prevent you from paying out of pocket for an employee’s medical expenses after an accident.
Workers’ comp challenges in small businesses and how PEOs can help
Workers’ compensation can be a pain point for some small business owners due to its cost and complexity. While larger corporations typically have the financial resources to handle overhead, it can be difficult for small businesses to manage. How can working with a PEO help combat the challenges small businesses face when it comes to workers’ compensation?
1. PEOs help streamline the somewhat complex process of workers’ compensation
Managing workers’ comp can be somewhat tedious and time-consuming, and for small businesses with limited manpower, it can be incredibly challenging. From the confusion of calculating premiums to handling the complexities of claims, it’s a lot to manage—particularly when you have countless other tasks on your plate.
PEOs can help streamline the process by integrating workers’ compensation into payroll. They also handle everything involved with the claims process—from taking care of the paperwork to communicating with insurance and the injured employee.
2. They offer flexible pay-as-you-go programs so you only pay for what you need
With traditional workers’ compensation, businesses typically pay an estimated premium upfront to cover the entire year. At the end of the year, the insurer will perform an audit to determine the exact cost, based on things like payroll and the number of employees. This means you could be reimbursed at the end of the year, or you may actually owe money for the difference.
PEOs offer pay-as-you-go programs that are perfect for small businesses that may not be able to afford a lump sum at the start of the year. It’s also great for companies who hire short-term workers’ on a project-by-project basis. With a pay-as-you-go program, you’ll pay only for what you need during the periods of time you need it.
3. PEOs implement safety training programs to help avoid future incidents
No matter the size of your company, risk management is crucial to help keep your workers safe on the job. Small businesses may not always have policies in place to help keep the workplace safe the way a larger company typically does. PEOs may implement safety training programs to help mitigate potential injuries.
In addition to helping prevent injuries from occurring, PEOs also play a role in helping reintegrate employees back into the workplace after recovering in the event an accident does take place.
Partnering with a PEO as a small business
No matter the size of your company, risk management is crucial to help keep your workers safe on the job. Small businesses may not always have policies in place to help keep the workplace safe the way a larger company typically does. PEOs may implement safety training programs to help mitigate potential injuries.
In addition to helping prevent injuries from occurring, PEOs also play a role in helping reintegrate employees back into the workplace after recovering in the event an accident does take place.
As a business owner, you most likely have a lot on your plate at any given moment. Not only are you the creator, critical thinker, and problem solver behind the scenes, but you also have to consider the day-to-day operations of your business as well. It can be overwhelming for one person to handle, so being able to delegate or outsource certain tasks is crucial to keep things running smoothly.
Administrative tasks like workers’ compensation management can be complex and time-consuming, but there are solutions that can help. Professional employer organizations (PEOs) will often take on the duties of workers’ compensation, payroll, or human resource services. Let’s dive into 5 reasons your business should consider a PEO for workers’ compensation management.
1. You can focus on growing your business
Business strategy and growth shouldn’t have to fall to the wayside because of the administrative tasks that need regular attention within your company. Handling workers’ compensation can be tedious and time-consuming. By outsourcing that aspect of your business to a PEO, you can save valuable time and energy to focus on the areas of your business that need it the most.
2. Workers’ compensation can be complex to calculate
Calculating workers’ comp can be somewhat complex. Premiums will vary according to the employee’s classification, total payroll, the type of industry you’re in, and any previous claims history. While there’s a lot to take into account, working with a PEO can alleviate some of the overwhelm.
In addition to relieving some of the stress that comes with workers’ compensation claims, a PEO can help you save money in the long run. When you trust the professionals with the calculations, you can rest assured that no mistakes will be made. When it comes to workers’ comp calculations, getting it right the first time is incredibly important—otherwise there could be financial consequences.
3. PEOs will prioritize safety trainings for your employees
In many cases, PEOs will provide safety training programs that could help prevent future accidents on the job. Risk management services are crucial not only in helping keep your employees safe, but also in preparing for what to do in the event an accident does occur at work. Additionally, if an incident does take place, a PEO can help reintegrate the injured employee back into the workplace after their recovery. They can ensure the employee has had the financial and physical support they need before coming back to work.
4. You can tailor your workers’ comp to meet your company’s needs
One of the best things about partnering with a PEO is that typically you can tailor your workers’ compensation to meet your company’s specific needs. This is particularly great for small and mid-sized businesses that may not need the standard coverage provided to larger corporations.
PEOs often offer pay-as-you-go workers’ compensation programs, which can also be beneficial for companies that hire workers on a project-by-project basis. Working with a PEO for workers’ compensation management means you’ll be able to adjust your plan according to the duration and amount of coverage you need. This means you’ll have the coverage you need when you need it, without having to pay for something you don’t use.
5. You’ll have the expertise and experience of risk management professionals
Ultimately, working with a PEO means you’re leaving the workers’ compensation aspect of your administration process to a team of experienced professionals. You won’t need to spend tons of time figuring out how to run that aspect of your business—-you’ll simply need to find a PEO that checks all the boxes of what you’re looking for.
No matter what type of business you own or the size of your company, working with a PEO could be a great way to focus on what matters most in your business. You’ll have more time and space to work on growing your business, you won’t have to worry about calculation errors, your employees will have regular safety training programs, you’ll get a workers’ comp plan that’s unique to what you need, and you’ll have the expertise and experience of professionals in your corner. Keep these 5 reasons in mind when you consider working with a PEO for workers’ compensation management.