The PEO model, or Professional Employer Organization model, is a popular outsourcing solution for businesses looking to streamline their HR, employee benefits, payroll and taxes, risk management, and compliance functions. In this guide, we will answer six of the most popular questions about the PEO model.
The PEO model is a business solution where a company outsources its HR functions to a third-party provider known as a Professional Employer Organization (PEO). The PEO assumes responsibility for HR management, including employee benefits, payroll and taxes, risk management, and compliance.
Under the PEO model, the employer contracts with a PEO to provide HR services to its employees. The PEO becomes the employer of record for tax purposes and handles all HR-related tasks. The employer retains control over day-to-day operations while the PEO handles administrative responsibilities.
The advantages of using the PEO model include cost savings on employee benefits, reduced liability for compliance issues, improved risk management practices, and access to a team of HR professionals who can handle complex HR-related tasks.
The decision to use a PEO model should be based on your business needs. If your company has limited resources to manage HR functions or lacks in-house expertise in areas such as compliance or risk management, then using a PEO may be beneficial.
When choosing a PEO provider, consider factors such as their experience in your industry, their level of customer service, their pricing structure and fees, their technology platform and tools for managing HR functions.
One common misconception about the PEO model is that it involves giving up control over HR functions. In reality, the business retains control over its operations while the PEO handles administrative tasks. Another misconception is that the PEO model is only for large companies, but it can be a useful solution for small and mid-sized businesses as well.
Overall, the PEO model can be an effective way for businesses to outsource their HR functions and improve overall operations. By partnering with a trusted PEO provider, companies can save time and money while focusing on core business activities.
