peo insurance

PEO Insurance and Human Resources Outsourcing

Running a successful company requires a lot of diligence, as well as a strong core of management and employees in order to keep things running efficiently. Many companies must spend precious hours handling important issues like payroll, compensation, and benefits processing, along with the administering of vacation and sick time. All the while they also must keep up on changing regulatory compliance, data crunching, along with managing the keeping of company records, auditing and a lot of other time consuming tasks.

Companies known as professional employer organizations, or PEOs for short, are contracted by organizations looking to lighten the burden by outsourcing human resources (HR) as a way to allow them to focus on other pressing matters. This is particularly true of staffing agencies that must often work outside of the box. Having PEO insurance allows them to address issues related to working with a third-party provider.

Choosing the right PEO

Such an important decision should be considered carefully, and in order to make the proper selection it helps having an insurer familiar with this type of arrangement to assist with deciding on which choice will provide the most benefits. You need to ensure that you have the right fit between employer and PEO. You want to be certain of the level of service you can expect, the kind of insurance benefits this arrangement will provide, and make sure that the cost is well worth it.

As a small business owner, you’ll need to analyze the time normally wasted on non-revenue generating activities. Operating an HR department can be difficult, strenuous, and time-consuming. By freeing up your staff’s time to focus on more crucial activities, such as client requests and needs, you can strive to improve the quality of your products and services. Allowing time to engage in more marketing activities can really increase your exposure and potential earnings.

Consider how HR outsourcing will allow you to use that time saved and devote it to more important aspects of your business. This time can be spent sending out newsletters, posting on social media, even updating your blogs. By eliminating time-consuming activities that adversely affect your bottom line, you can focus on networking activities to generate more sales. This arrangement may come with added risks, but your peo insurance can help satisfy your needs in this area.

PEO Insurance Provides Staffing Companies Certain Advantages

Professional Employer Organizations (PEOs) provide a very valuable service for business owners in need of help in the area of human resources. Quite a few businesses have opted to meet these demands by utilizing the services of a PEO.

Business owners, along with their managers and employees technically become legal employees of the PEO. They retain all of the functions of an employer in terms of hiring employees, setting wages, and dealing with issues related to payroll, benefits administration, workers’ comp, health insurance, and retirement accounts. Peo insurance is necessary to help mitigate any risks and exposures related to dealing with employees and other risks associated with this arrangement.

Enlisting the services of a PEO

Basically, the owner of the business pays the PEO to cover all payroll expenses plus an additional fee for their services. PEO’s often prove to be the right move for many small and medium-sized businesses. There are, of course, advantages and disadvantages of PEO’s and therefore it is well advised to make an informed decision before making a commitment.

Some of the advantages of PEO’s are that owners no longer have to deal with issues related to human resources directly, freeing them up to concentrate on other pressing issues pertaining to running a business. PEO’s are often better equipped to negotiate deals for health insurance and other benefits because of the volume of business they can offer.

There are also some disadvantages with PEO’s, since under this arrangement, legally the company no longer has any employees, and also transitioning to a PEO means that the company legally terminates all employees, who are then rehired by the PEO. While retaining all of the same employee decision-making power that they held before, now paychecks will be issued under the name of the PEO.

Furthermore, the employees may need to identify the PEO as their employer on their tax returns as well as if they apply for loans. Employees should be made to understand how this arrangement affects them ahead of time. With the PEO as the employer, PEO insurance is going to be required for many of the concerns that may spring up and also valuable if lawsuits or other actions of consequence take place.