Professional Employer Organization - PEO: Media Comments

Reduced Costs

"Outside of marketing and promotion, personnel is often times the most costly part of running a small business. With every employee there is workmen's compensation, social security tax, and other matching funds taxes that can really add up. For a lot of small business owners, today's changing economy means longer hours and less help. Cost is a major factor when it comes to staffing. Small businesses everywhere have the same complaint about how much money each staff member is costing, but there is also the time involved each time you have turnover and to do your payroll.

For most smaller businesses, time and turnover are the top priorities when it comes to staffing. In part, the added time comes from increased turnover, and increased turnover comes from needing more benefits. Benefits, however to a small company can be as much as twice that of a larger corporation, and you can't always afford to offer everything you want.

There is a way around some of this - Employee Leasing! This concept has been around for a long time and is starting to be used more and more. The best part is you don't do the paper work and spend the long hours reviewing forms and sending in forms. The company you use will take care of all that, and offer your staff benefits at prices larger companies see. You just write a check and they take care of the rest.. You still are in charge of your staff, hire and fire them, train them, and every other aspect of employment management -- you just don't do the paper work. Their workmen's compensation, health and medical insurance, and other benefits can be a lot lower. That means your fees are a lot lower too."

"Making Ends Meet With Employee Leasing" Wing

Remaining Competitive

"PEOs give companies with 10 to 50 employees a competitive edge by allowing them to offer corporate-quality benefits on an entrepreneur's budget. Outsourcing HR also frees larger businesses from the payroll burden of an in-house HR department, so executives and top managers can focus on growing their core business instead of managing personnel issues.

Bolder Boulder Race Director Cliff Bosley agrees. "You're at a real disadvantage if you can't offer potential employees the same benefits that a large business can," Bosley said. "And let's face it, who isn't looking for good people? PEOs effectively level the playing field so a small company can stay competitive with the big boys. And with 2 percent unemployment, every employer is looking for the edge."

"This kind of arrangement is good for small employers like us. We receive our standard benefits through (our PEO), and by virtue of their numbers, they have much more leverage when it comes to negotiating on our behalf," says Bosley. When a company with five employees, like the Bolder Boulder, joins forces with 100,000 other employees across the country, everyone benefits from an economy of scale. This arrangement translates into lower costs and better benefits for employers and employees alike. "

"Outsourcing Trend Creates PEO Niche' Boulder County Business Report --Mark Saunders

Time Savings

The Small Business Administration reports that small business owners spend 20 to 40 percent of their time performing "non-production" obligations. Of course, these tasks are necessary, but they steal time and attention away from your primary focus: increasing your profits.

PEOs often provide the only way in which a small business owner can offer Fortune 500- caliber benefits such as retirement savings plans, life insurance, health insurance, vision and dental care, job counseling and education reimbursement."

"How to Handle the Nitty Gritty" Rose

"Across the country, entrepreneurs and small-business owners are turning to professional employer organizations (PEOs to be their human-resources managers. Billing themselves as "co-employers" PEOs check references, set up 401(k) plans, and even do the dirty work of firing while generally exercising no more than a veto over key personnel decisions. More than 2.5 million workers are hired through such arrangements, up from 200,000 a decade ago, according to the National Association of Professional Employer Organizations. Most are full-time, permanent employees, not temps. For a small business, the potential benefits are obvious. Imagine if someone else screened job candidates you interviewed, and sorted through health and retirement plans--and then ran them. What small-business owner would not gladly give up scrutinizing compliance with federal and state employment laws? Sometimes, PEOs even save a company money. A PEO typically charges 3% to 6% of net salary. But passing along the lower costs of group benefits or handling administrative chores efficiently can result in net savings.

Finding a PEO can be as simple as looking in the phone book under "employment service--employee leasing" (table). But choosing the right one is harder--and crucial. In addition to credentials and financial health, it's important to understand the range of services a PEO offers and its compatibility with your company. Some specialize in small companies (up to 20 employees), some in midsize (up to 600), while others focus on particular industries. As a rule, PEOs can benefit smaller companies the most. When a workforce reaches 100 or more, a business owner can justify a full-time administrator for payroll and benefits. But an employer needs 200 to 400 workers before the purchasing power for health care and other benefits starts to equal a PEO's.

To small-business owners such as Russell West, a franchisee of a Schottzsky's Inc. Deli outlet, there are other savings to consider. "When I first opened, I wanted to do everything myself," he says of his 14-employee operation in Hapeville, Ga., which now uses Novacare. "But this takes the load off small-business operators like myself." The deal does provide better benefits to his workers. And best of all, West gets a benefit of incalculable value to small owners: more time to concentrate on running his business. "

"You do the Work, They do the Paperwork" Business Week--Gail DeGeorge

Regulatory Compliance

"If you're looking for a way to provide costly benefits like health insurance and retirement plans as well as reduce administrative costs and paperwork hassles, you might want to look into employee leasing.

Simply put, employee leasing means that you pay a leasing firm to put all of your employees, even yourself, on its corporate payroll, and you "lease" them back. In return for the fee, plus expenses, that organization takes over payroll and human resources functions, handling withholding taxes, paying insurance premiums for unemployment insurance, health care and other necessary insurance and administering benefits. Because a leasing firm usually handles the payroll of many companies, it can bid for more favorable group rates on various types of insurance and retirement savings plans.

Some leasing firms offer other services too. Such as employee recruitment and training and establishing policies for interviewing, hiring, reviewing and terminating employees in compliance with state and federal laws such as the Americans with Disabilities Act. In some cases, they even offer employee telephone hotlines to help them with personal or work-related problems."

"Employee Leasing" American Express Small Business Exchange

Find out for yourself is a PEO is right for your company. Get quotes now.