A professional employer organization(PEO) is a complete or absolute solution for HR for small and medium-sized organizations. PEO is a firm that provides recruitment services to organizations and also they provide Payroll compensation, employee taxes, employee benefits, etc. These PEOs are also known as co-employment.

PEOs are having a contract to take the employer’s responsibility and the risk for the workforce. So other responsibilities are shared between the organizations and PEOs for the betterment of the employees. PEOs have to take care of the work performed by the employees. New Horizons global partner and HRone are examples of Professional employer organization

Few organizations think PEOs are for temporary help for the businesses but there are few organizations that talk very differently about the PEOs. 

What is the Process of PEO

  • When some organizations hire an employee from the lease company then there is an arrangement done by the employer for outsourcing the employee like employees benefits, safety, training, development, etc.
  • PEO has to maintain the employer’s record for tax purpose and the companies have to direct the employees to day-to-day activities
  • PEOs will charge a fee from 3 to 15% of the total gross payroll 

Advantages of  PEO

  • Beneficial for administrator
  • Easier recruiting and hiring
  • Payroll administration
  • Unemployment administration
  • Workers compensation administration
  • Compliance assistance
  • Drug testing programs
  • Leave Act administration

Disadvantages of PEOs

  • Chances of loss and control of essential data and peoples
  • Other company may affect our culture
  • Smaller value of HR department
  • Less control and security over employee data and their paperwork
  • Loss of internal knowledge
  • Security issue
  • unwillingness from employees

Why we use PEOs

There are many reasons or benefits of PEOs. 

  • Employers have to invest less amount PEO.
  • Businesses that use PEOs have a faster growth rate of 7-9%
  • Organizations have fewer arrangement expenses to 10-14% if they hire PEOs.
  • PEOs offers are very affordable for small and medium business and they have competitive benefits and health insurance plans
  • PEO stay up-to-date with the businesses rules and regulations 

Hiring a PEOs Beneficial for which Industry

PEos work for many industries.

  • Services providers
  • Construction
  • Transportation
  • Retail
  • Manufacturing
  • Wholesale
  • Agriculture 
  • Mining 

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