Ever since the economic recession hit the global market, businesses (especially the small scaled ones) are finding different means on how to save money in order to stay afloat. Cutting back on expenses takes on many forms, all in an effort to save their company. In order to avoid drastic measures that can lead to finally shutting down its operations, businesses rely on the services of a PEO Company that takes over the responsibilities often performed by the Human Resources department such as payroll and taxes.
National PEO Company (image from findthebest.com)
How does it work? The setup is similar to that of two companies managing their employees. The PEO acts like a co-employer and they are responsible for performing the administrative duties such as payroll and taxes while the company continues to focus on its operations. It takes off a huge burden for employers especially during the first few years of the business when management and operations frameworks are still being established.
Also referred to as employee leasing or HR outsourcing, it provides a company with a number of benefits particularly when it comes to cost in managing employees. It has become a trend in the industry which is why a number of businesses are now considering to utilize such services. But before you start the hunt, make sure that you know the reasons why it is better to hire one. Keep in mind that these companies offer various types of services and it will be ideal to choose one that answers your needs and requirements.
Some PEO may offer an outsourced HR department while others might only focus on payroll administration. Know what type of services your business exactly needs; if you are only looking for one that can handle the payroll then choose one that offers this type of service; this is a practical approach rather than having to sign up for services that your company doesn’t really need. Another reason why small and medium-scale enterprises are working with Professional Employer Organization or PEO is to protect their interest and that of their employees.
Given the limited amount of resources and capital, businesses should minimize the risk of getting involved in lawsuits and other legal matters often caused by mishandling of employee benefits, payroll and taxes. Establishing an entire HR department just to work on this task is a big expense for small companies which is why it is more practical for them to outsource and pay for the services at an affordable rate. It will give these businesses more time to focus on operating than having to go through and process office paperwork.
This developing trend in outsourcing provides an employer with a number of benefits. It gives the assurance that the company runs in compliance with existing business laws and regulations in order to avoid fines and lawsuits. It can also help minimize the cost of health insurance and workers compensation. Working with an HR outsourcing company may also provide your employees with the proper safety training and risk assessment in order to prevent any possible injuries while at work. Think of it as a helping hand that is extended to guide your business to the path of the success.
This guest post was contributed by Angela Smith, who is a writer for National PEO.