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Optimizing Your Business with PEO Services: A Cost vs. Benefit Analysis

Optimizing Your Business with PEO Services A Cost vs. Benefit Analysis

Small and medium-sized business owners tend to wear many different hats within their organization. Not only are they the creative behind their offerings, but they’re also in charge of business strategy, growth, and all of the little details in between.


Whether your organization has one or one-hundred employees, small and medium businesses play a pivotal role in a successful economy by helping their local communities thrive. In order for your company to succeed, however, optimizing your business is crucial. Outsourcing administrative tasks like payroll, workers’ compensation, and other human resource services is a great way to optimize your business so that you can focus on what matters most.


Professional employer organizations work with small and medium businesses to help manage their administrative tasks. Simplifying payroll and workers’ comp is a huge benefit of using a PEO as a small or medium business. Let’s dive into a cost-benefit analysis of PEO services and when it’s worth it for your company to partner with a PEO.


Costs Involved in PEO Services


PEO services can vary in cost depending on the services you use, the number of employees you have, the industry you’re in, and where you’re located. Typically, that number will be a flat-rate for each employee or a percentage of your company’s total payroll. Things like state and federal taxes, workers’ compensation, insurance, and Medicare will likely also be included in your PEO fees.


Key Benefits of PEO Services


For small and medium businesses, working with a PEO can offer many benefits. When you partner with a PEO, you can:


1. Focus on business growth


As a business owner, you’re the brains behind the operation. The success of your company relies on your ability to focus on your strengths. Administrative tasks require daily attention that can ultimately take away from strategy and growth. Working with a PEO gives you the space to focus your time and energy where it’s most needed.


2. Find the best insurance coverage for your needs


A major benefit of working with a PEO is the ability to tailor your workers’ compensation coverage to meet the needs of your employees. Small and medium businesses often have contracted workers with hours that vary, which means standard coverage may not be the best fit. PEOs offer pay-as-you-go plans that allow you to adjust the plan depending on the duration of the project and the amount of coverage needed.


3. Stay compliant with workplace regulations


Rules and regulations within the workplace are constantly changing. From state and federal regulations to healthcare and minimum wage, PEOs stay up-to-date with regulations so that your small or medium business can remain compliant.


4. Keep your employees up-to-date with safety trainings


Unlike larger corporations, small and medium businesses may not have safety trainings in place for their employees. When you work with a PEO, however, they’ll do it for you. Many PEOs implement safety training programs to help prevent future accidents from happening on the job. These programs help protect employees from being injured at work, ultimately helping companies save money in the long run.


5. Increase your employee retention rate


When you’ve got a great team full of talented individuals, you likely want to keep it that way. When employees feel valued and taken care of at work, they’re more likely to stay where they are. As a small or medium business, offering competitive benefits packages and streamlined, timely payroll is crucial for worker retention.


PEO Services vs. In-House HR


While an in-house human resources department will have an understanding of your company’s culture, the benefits of using a PEO may outweigh the cost. PEOs have the ability to offer competitive benefits with more flexibility than standard options. While they won’t be located down the hall from your office, a good PEO will have readily available representatives to help whenever you need it.


Calculating ROI from PEO Services


A study from the National Association of Professional Employer Organizations (NAPEO) looks at five separate areas to determine cost savings for PEO clients: HR personnel costs, health benefits, workers’ compensation, unemployment insurance, and other costs related to HR services. NAPEO estimated the ROI for PEO clients each year is 27.2%, meaning for every $1,000 spent on PEO services, the average client would save $1,272.


Is a PEO Worth It?


As a small or medium business, working with an experienced PEO like our team at PEOPayGo, the benefits will outweigh the costs when it comes to streamlining and simplifying your HR services. Reach out to us today to see how we can help.

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