Thanks to the fact that a PEO has the buying power of hundreds of businesses with thousands of employees, it can save your small business a serious amount of money. Small businesses that partner with a PEO can save money in a variety of different ways, particularly due to the fact that a PEO gives you the option to offer more employee benefits to your team at a reduced rate compared to getting them on your own. Due to co-employment, a PEO is able to get you a better rate for many of the main benefits such as medical insurance, workers’ compensation, retirement plans, and other perks for workers.
What is a PEO?
Professional Employer Organizations (PEOs) work with small to medium businesses to help them manage a range of tasks including human resources, payroll, compliance, employee benefits, and more of the necessary functions to running a successful business. A PEO is able to take over the handling of all this on behalf of your company so that you are able to free up time and focus on what matters the most; expanding your company.
By grouping together a range of growth-stage companies, a PEO can provide a small business with a similar buying power of larger organizations. This allows these small businesses to access similarly affordable rates enjoyed by bigger businesses, meaning access to better-quality employee benefits and perks that might have been out of reach otherwise. Since they are able to buy the benefits in bulk for several small businesses at once, they are typically able to get a better rate per employee. And, having these more attractive and higher-quality benefits on offer gives you a better chance at attracting and retaining top talent.
So, what are some of the main ways in which working with a PEO can help you save money?
Smoother International Expansions
Small businesses looking to grow their business by moving into an overseas market can certainly benefit from the services of a PEO. For example, if you want to expand into Taiwan, this Taiwan PEO can help you get set up, understand local employment laws and compliance, navigate the hiring process internationally and help you find the best local talent, and make it easier for you to navigate international banking practices, currency exchanges and more. New Horizons Global Partners offers a PEO service designed to help small to medium businesses facilitate a smooth and successful overseas expansion. Their website has more details on what they offer; you can learn more there.
Improves Employee Performance
Performance management is becoming more important than ever before as many companies take steps to enhance their overall workplace culture and make it a nicer place for employees to spend their time. And, it’s all for a very good reason – after all, employees spend the most part of their week in work and workers who are engaged with their job and satisfied with the experience tend to have better levels of productivity and more loyalty to their employer. A PEO can not only help you improve the workplace culture with a range of better employee benefits, but they can also help you design performance reviews and appraisals, offer better rates on employees’ training courses, and assist with employee reward programs.
Every year, around 30% of small businesses are fined for making tax and payroll mistakes that could have been avoided. The truth is that trying to take this side of things on by yourself can be very tricky and there’s simply too much room for human error if you are not particularly experienced in this aspect of running a business. Working with a PEO allows you to access a professional, experienced team who can take on the mundane yet essential aspects of HR, payroll and compliance for your company allowing you to avoid small yet costly mistakes and free up your time to focus on what matters most, like growing your business and building better relationships with your employees.
Hire the Right People
Many PEOs offer a recruitment agency service, which can be particularly useful for businesses that are looking to expand their company overseas and want to ensure that they get access to the best local talent in their new location. Hiring the right people will increase productivity for your business, boost employee retention, and help you save money on recruitment costs. Working with a PEO makes it easier for your business to find and hire high-quality employees more effectively, better manage the interview and selection processes, and put together efficient and effective onboarding procedures allowing you to get the right people on the job faster.
Offer Better Employee Benefits
Working with a PEO allows you to offer a wider range of high-quality employee benefits at a much cheaper rate compared to getting them on your own. This is because many of the benefits offered to employers are provided at a discount for the more employees that are going to be receiving them. For small businesses with small teams, getting employee benefits such as health insurance, retirement plans, and even discounts in stores or for gym memberships can be costly. On the other hand, a PEO uses a process known as co-employment to ensure that their clients get the best prices. To achieve this, they apply for employee benefits for the employees of several different companies in a group, allowing them to access the discounts that are usually reserved only for much larger businesses.
Save on Hiring in-House
Since working with a PEO gives your small business access to a team of professionals who can take on the responsibility of handling important business processes like recruitment, payroll and human resources, your business can save money due to the reduced need to hire in-house employees to take care of these tasks for you. Working with a PEO means that you do not have to worry about spending money on hiring an in-house team of HR or finance professionals, for example, as for the most part, the PEO will be able to handle this side of the work on your behalf.
Faster Business Expansion and Growth
Finally, while a PEO can help you save money in a variety of ways, this type of partnership can also help your business improve its bottom line and make money too. By handing over a lot of the routine, mundane tasks of running your business to a PEO, you can free up a lot of time for yourself and your team, allowing you to invest more effort into processes that directly affect business growth and expansion. When you can trust your PEO to take care of payroll and make sure that your business is compliant, you can spend the time that you will save on doing this yourself on putting together effective marketing campaigns, designing new products and services, and engaging with your customers to facilitate company growth and become more competitive in your industry.
Working with a PEO has several benefits for any small to medium business that wants to expand, either at home or into an international market. From the ability to access better employee benefits at a reduced price and attract better job candidates, to the fact that you’ll simply have more time to focus on growth, working with a PEO can be a very cost-effective decision for your business.