What Is a PEO and How Does It Affect Your Business?

What Is a PEO and How Does It Affect Your Business?

peo insurance

Small businesses make up the majority of all businesses. Running a small or medium-sized business can make it more difficult to get adequate insurance coverage for the right price. Some companies form together to form a Professional Employment Organization and use PEO insurance to cover their liabilities.

PEO Basics

Companies that form a PEO use it to outsource their compliance, payroll, benefits, HR and workers’ compensation. The PEO handles a lot of the backend items that are essential to run a business. As the employer of record, the PEO assumes the associated liabilities which can be positive or negative.

PEO Pros

Using a PEO can make it easier for the company to focus on growing and running the day-to-day tasks. The PEO stays up to date on regulations, handles the HR and offers competitive insurance rates.

PEO Cons

In order for the PEO to take HR responsibility, the company must adopt all of its policies and procedures. A PEO doesn’t allow for total autonomy in running your business. Many PEOs charge based on a percentage of payroll.

PEO insurance can offer more insurance options at better rates than a solo small business. The insurance options the PEO chooses can help them provide quality service to their employees. Insurance is one key area that PEOs can benefit small businesses.