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What is a PEO and Why Do You Need One?

What is a PEO and Why Do You Need One?What is a PEO and Why Do You Need One?

What Is a PEO?

PEO, short for Professional Employer Organization, is a firm that offers services that allow its business clients to outsource their employee management and HR functions. When a business hires a PEO, the PEO becomes an extension of the business and engages with their team and management on their behalf to provide them with the training, services, and technological solutions they need.

Services offered by PEOs:

  • Talent Acquisition
  • Onboarding
  • Payroll
  • Human Resources
  • Risk Management
  • Compliance
  • Tax and Benefits Administration

Most PEOs offer these core services to their clients. When you hire a PEO to assist you in those services, they will lease their experts on the matter to your business and will assume responsibility and liability for said services and operations. Your business, however, will retain responsibility and control over fundamental activities such as product development and production, business operations, marketing, sales, and service.

Why Your Business Needs a PEO?

"Small businesses that work with a PEO grow 7 to 9 percent faster, have 10 to 14 percent less employee turnover, and are 50 percent less likely to go out of business." - NAPEO.

With PEO's traditional services, your business's operation will be transformed as you, and your managers and employees gain valuable knowledge from experts and guidance for staying compliant with your local, state, and federal laws and regulations.

With Payroll services, for example, a PEO can provide you with full-service payroll management where the payroll experts will handle all the paperwork, payroll processing, benefits deductions, W-2 processing, tax filing, reporting, and much more. Most PEOs usually associate an integrated platform with their services that provide your employees with self-service capabilities, time and attendance recording, digitalized timesheets, and more.

As for Human Resources outsourcing, your PEO HR experts will provide you with all the knowledge and guidance you need to manage your employees, in addition to several other services that include:

  • Building employee handbook
  • Creating workplace policies
  • Employment Practices Liability Insurance
  • HR Calendar Maintenance

PEO will also optimize your hiring and onboarding processes by utilizing the best hiring methods and performing background checks and screening on your candidates. They can also refine your interviewing strategy and assist your new hires in a smooth transition.

Moreover, PEOs will take the burden of handling taxes and tax filing off your back. They will ensure your business taxes are being paid accurately and on time, so you can rest assured that your business stays compliant and free from any law violations and costly fines.

Furthermore, PEOs collaborate with most of the top insurance carriers, and they can allow you to build comprehensive benefits packages, which can include health insurance, dental and vision, life insurance, and much more, as they take on the processes of benefits administration, employee enrollment, and consulting services.

Benefits of Working with a PEO

Working with a PEO can offer your business a range of benefits, the main of which include:

  • Burden relief from employment administration
  • Access to a team of professionals
  • Reduced liability due to improved employment practices
  • Competitive employee benefits plans and prices
  • Boosted productivity and profitability

How Much Do PEOs Charge?

Most PEOs customize their service costs depending on their clients' needs and their business size. One misconception regarding their costs is that they are too expensive for small or medium-sized businesses; that, however, is untrue. PEO services will save your business a lot of money in the long run as they keep your business compliant, administer benefits and taxes and provide all the services we previously mentioned. You will certainly find that a PEO is a great investment and will positively influence your return on investments.

Best PEO Companies

Now that you are familiar with what a PEO is, its benefits, and what it can do for your business, allow us to present you with our top three recommendations for the best PEOs you can get started with.

1. Paychex

Paychex is our top recommendation for one of the best PEO companies in the industry. Paychex PEO will provide your business with the HR guidance and technology it needs to simplify your employee management processes.

Paychex will assign you dedicated professionals that will provide you with a wide range of services, some of which include:

  • Payroll Processing
  • Employee Benefits and Administration
  • HR Services
  • Time and Attendance
  • Business Insurance
  • Learning Management System and Training
  • Risk Management
  • Employee Performance Management

In addition to these services, Paychex will also provide you with an integrated HR platform that streamlines your day-to-day processes with detailed and accurate invoicing and reports.

Paychex does not advertise any prices for its employee-leasing services, as this price will be dependent on your business size and needs. It does, however, offers plans and prices for its software solutions:

Paychex Flex Essentials - $39/month, + $5 per employee

Paychex Flex Select – Quote-based

Paychex Flex Pro – Quote-based

Read our full Paychex PEO review to know more about its employee-leasing services.


BBSI is our second recommendation for one of the best PEO companies. BBSI offers comprehensive services and a unique pay-as-you-go workers' compensation model that many businesses find attractive. The Employer Services Assurance Corporation (ESAC) Client Assurance Program fully accredits BBSI, which provides it with the gold standard for PEOs.

Some of the main services BBSI offers businesses are:

  • Business Strategy Development
  • Human Resources
  • Payroll Administration
  • Retirement Benefits
  • Risk and Safety
  • Staffing and Recruiting
  • Technology Solutions
  • Workers' Compensation

As for its prices, BBSI will customize its prices according to your business's needs and the number of employees. You can reach their team at 1-800-494-5669 or by submitting and filling out the short form that you will find on their website.

Read our full BBSI review to know more about its employee-leasing services.

3. Justworks

Justworks is our last pick for one of the best PEO/employee-leasing companies. It will provide you with an exclusive set of services to aid you in administrating employment-related responsibilities. Some of Justworks' main employee-leasing services include the following:

  • Hiring and onboarding for remote teams
  • Automation and employee self-service
  • Payroll and taxes
  • Benefits administration
  • Software integrations
  • Contractor payment
  • Employment Practices Liability Insurance

Justworks offers two plans for its PEO services and HR software and tailors their pricing to the number of employees your business has; for 25-99 employees, the prices are:

Basic plan: starts at $44/month/employee

This plan comes with Payroll services, Benefits, HR tools, and Compliance.

Plus plan: starts at $89/month/employee

This plan packs everything in the Basic plan, plus access to Medical, Dental, and Vision health insurance plans.

Read our full Justworks PEO review to know more about what it can offer your business.

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