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10 Questions to Ask Your Future PEO: The Ultimate Guide

10 Questions to Ask Your Future PEO: The Ultimate Guide10 Questions to Ask Your Future PEO: The Ultimate Guide
10 questions to ask your future PEO.

Published: November 5th, 2023

Are you considering partnering with a PEO? Are you not sure what to ask them before finalizing the partnership? Dont worry! We’ve got you covered. 

To ensure you make an informed choice, it's crucial to ask your future PEO a series of important questions. This article will explore the ten questions you should pose to prospective PEOs. These questions cover the range of services, technology, and software solutions, employee benefits, compliance and tax responsibilities, and the PEO's reputation and trustworthiness. Let's dive in and learn how to make the right choice for your business's HR needs.


The Value of Collaborating With a PEO

The role of a PEO.
The role of a PEO. 

The world of PEOs may be confusing, but having a solid grasp of what this provider is and what they do will simplify many things. A Professional Employer Organization (PEO) is an HR outsourcing provider that offers extensive services for managing human resources, allowing them to provide HR solutions easily. 

They work as your partner and are like an extension of your HR team through a relationship called co-employment. This relationship requires both parties to sign a contractual agreement called a Client Service Agreement (CSA), where liability and risk are shared. 

This partnership allows businesses to offload HR tasks such as payroll processing, human resource consulting, regulatory compliance, employee benefits administration, risk mitigation services, and so much more. This would allow businesses to focus on core operations like increasing profits or enhancing marketing efforts.

Their expertise helps navigate the most complex HR regulations and ensure compliance. They also provide enhanced employee benefits like savings plans, wellness programs, and health insurance, increasing employee satisfaction and retention, which improves overall business operations.

This is optimally done by asking the PEO these questions and understanding them to reach maximum potential with this partnership.

1. What Services Do You Offer?

The first question to ask potential PEO partners is about their service range and whether it aligns with your business needs or not. Begin by requesting a list of the standard services they provide; these include: 

  • Payroll and tax administration
  • HR compliance and risk management
  • Employee benefits management
  • Workers' compensation
  • Recruitment and onboarding
  • Time and attendance tracking

A PEO will typically offer the services mentioned above; however, specific services may differ from one provider to the next. For instance, some providers offer employee training and professional development programs, self-service software, and more, while others do not. 

Therefore, it’s crucial to discuss the complete list of services you access to know whether they align with your business goals and needs. 

2. What Technology & Software Do You Use for HR Management?

What software does a PEO use.
What software does a PEO use. 

An essential aspect of a PEO is their ability to provide timely and accurate employee payments, administer employee benefits, and conduct legal compliance. Doing so will not only result in an increase in employee satisfaction and retention but will also allow you, as a business owner, to eliminate penalties, fines, and criminal prosecution. 

With that in mind, the second question that needs to be asked is about the technology tools and software solutions they use. This is important because user-friendly, up-to-date, well-integrated, and safe software is what will make a difference. 

3. How Do You Ensure Compliance With State & Federal Laws?

Utilizing a PEO’s services ensures your business stays compliant with a multitude of state, local, and federal laws. Their years of experience help you navigate the complexities of employment laws, allowing you to focus on other core operations. 

A reputable PEO assumes responsibility for your business’s compliance requirements since liability is shared. This is why if a PEO makes any error during the compliance process, your business will be reprimanded. They also provide up-to-date information about any changing laws and regulations, looping you in on every step of the process. 

What role do I have in compliance?

Seek clarification about the role your business plays in the compliance process. Request a complete breakdown of the specific tasks you’ll be responsible for, ensuring the communication process is straightforward. 

As mentioned, because of co-employment, the provider takes on the responsibility of these HR services; however, there are some aspects where your business must take action, with guidance from HR experts. These roles are identified based on the contract agreement signed, so discussing these details is crucial to getting an idea of what you must do. 

4. What Accreditations & Certifications Do You Have?

PEOs that are accredited and possess industry accolades demonstrate the best possible practices and ethics. The Internal Revenue Service (IRS) and the Employer Service Assurance Corporation (ESAC) offer the two main certifications that a PEO company can have. 

An IRS-approved PEO, also known as a Certified Professional Employer Organization (CPEO), has successfully passed the IRS's evaluation and undergone financial background checks, guaranteeing that they comply with tax and regulatory standards. 

While an ESAC-accredited PEO ensures that they have the required financial stability to perform all HR functions and commit to the best practices. To learn more about how these certifications can provide enhanced benefits, read our blog on the best IRS & ESAC-Approved PEO Companies

Asking whether a PEO holds these accredited certifications is your best chance of getting high levels of trust and confidence in compliance and other services. 

For extra assurance, ask about the PEO's financial background and history. Some companies will provide this information on their websites. It’s important to note that this will not prevent any failures or mistakes from the PEO's side, but asking for and revising these financial statements with the PEO builds more trust and confidence. 

5. Am I Locked Into a Contract After Partnering With You?

Versatility is vital, and being confined to a long-term contract can be inconvenient. In the contract, there should be an agreed-upon contract length and termination fees. 

Information that you should be learning includes knowing if there are hidden fees with early cancellation, whether the terms and conditions of cancellation should be renegotiated, and what the cancellation process looks like. Understanding the commitment of this partnership allows you to make informed decisions. 

6. What Kind of Employee Benefits Do You Provide?

The role employee benefits play in a business’s success is vital, and partnering with a PEO typically gives you access to the best benefits. Different PEOs offer varying benefits, so before committing to one, it’s important to ask about the benefits they provide.

Ask whether they offer life insurance, retirement plans, corporate wellness programs, worker’s compensation, unemployment insurance, etc. It’s also essential to ask about the eligibility requirements of these plans to know whether your employees fit the criteria or not, because if they are not eligible, then getting these benefits would be unnecessary.

It’s worth mentioning that businesses must provide health insurance to employees according to the Affordable Care Act (ACA), and a PEO can provide these benefit offerings at a competitive rate. 

Additionally, some have the option of customizing these employee benefits plans, as the flexibility allows your employees to choose between different options. This can be a value-added consideration when choosing between different PEOs. 

7. What Are the Costs Associated With a PEO?

The costs associated with a PEO.
The costs associated with a PEO.

The fees and costs of a PEO can differ depending on the provider and their terms. However, a PEO usually prices their services based on three different models. 

The first model is a flat-rate fee per employee per month. This means that every month, you get charged a fixed fee per employee. The other model is a percentage of payroll. This means you get charged a fee based on the percentage of your annual payroll for all employees. 

The last pricing model is a combination of both flat-rate and percentage-based. The PEO uses a combination of the other two models to charge for different services in this particular model.

Getting a clear picture of the costs and fees associated with their services is paramount to understanding how they align with your budget. 

8. Are There Any Extra Fees for Certain Services?

Cost transparency is essential. Some PEOs will charge extra for specific services that are marked as “add-ons,” giving you access to basic services but requiring you to pay for others. Moreover, some will charge hidden fees, such as set-up costs or software integration. 

Inquire about the total cost structure, including any add-ons, additional services, or hidden fees, to get a clear understanding of what payments are to be expected. 

9. Does Your Organization Have Experience in My Business’s Industry?

Some PEOs have industry-specific expertise and specialization and have immense knowledge of the requirements, regulations, and challenges of particular industries. Therefore, ask the PEO if they know and have experience working with businesses operating in your industry. 

This factor makes sure that the PEO can handle all compliance requirements and tackle industry challenges, making the process smooth and ensuring effective management.

10. Who Will Handle My Needs & Questions?

A vital factor to consider before making a decision is whether or not the PEO provides reliable and responsive customer support. The world of human resources is complicated, and if faced with any questions, concerns, or issues, you will need a representative to respond. 

The PEO should provide you with an account manager or a local customer support team to respond to inquiries 24/7. Knowing where to direct these concerns and how reliable they are can enhance your experience with a PEO significantly. 


In conclusion, outsourcing your HR functions to a PEO should be a decision made after conducting in-depth research, as the fate of your company relies on it. 

Choosing a PEO can be a difficult task, but knowing the answers to questions like the services they provide, the technology they use, the types of employee benefits they offer, and how they ensure compliance gives you valuable insight into how they operate and how effective this partnership would be. Our top-rated PEO company reviews and comparison tool provide valuable information for those interested in partnering with a PEO. 

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