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Professional Employer Organization: how can it support your business?

Professional Employer Organization: how can it support your business?

What is a Professional Employer Organization (PEO)?

PEO stands for professional employer organization. A professional employer organization is a type of full-service HR outsourcing known as co-employment to small and medium-sized businesses. Probably you are aware that PEO services referred to as co-employment, HR outsourcing, or business process outsourcing . According to the National Association of Professional Employer Organization’s (NAPEO) definition, “PEOs enable clients to cost-effectively outsource the management of human resources, employee benefits, payroll, and workers’ compensation.”

The PEO area has been for more than years. However, take into account that there are diffrent types of PEOs. When you do research for you business needs, it’s important to research providers and compare their capacitis.

While they are often confused with Employers of Record (EORs), PEOs basicly do not employ talent on client’s behalf. Instead, they can help you hire and manage tasks like payroll, taxes, or benefits. General specific is that you are the legal employer.
PEOs are often locally based. So, for example, if you want to hire a new employee in the Bulgaria, you could reach a PEO based there.

Why use a PEO services?

Probably you’re concerned that working with a PEO means you’re going to lose control of your business. The truth is that you will never lose control of your company when you hire a PEO. In fact, a PEO will help you make more informed HR decisions that will make your business stronger. A PEO partners with you so that you don’t have to navigate HR, risk and compliance on your own, thereby supporting you grow your business.

How PEOs work

In a co-employment relationship, both the business and the PEO share certain employer accountabilities. The PEO typically dealing with payroll, payroll taxes, maintains workers’ compensation coverage, administers employee benefits and provides HR guidance it it is needed. This leaves you to manage regular business operations, like providing products and services to customers, and making decisions about which employees to hire or fire.

What does PEO not do?

  • Make decisions cin terms of your business independently
  • Support with marketing or sales
  • Rule pay rates, hours or schedules
  • Make hiring and terminating decisions instead of you

How to choose a professional employer organization

To choose the right PEO for your company, shop the co-employment market just as you would for any other strategic business need.

PEOs typically support with:

  • Payroll and taxes

PEOs process payroll and in some cases, can pay employment taxes. Many also integrate payroll with time and attendance, which helps reduce duplicate data entry and errors.

  • HR support

In many cases, a PEO has experts who provide HR services and support. If you already have an in-house HR specialist or team, the PEO partners with them both administratively and strategically.

  • Compliance

PEOs typically have professionals who can support you protect your business from penalties. Their area of expertise may include payroll tax law and reporting requirements, unemployment insurance, workers’ compensation, hiring and HR compliance.

  • Risk and safety

In addition to workers’ compensation insurance, PEOs sometimes provide safety audits in order to help you limit claims.

  • Talent management

Some PEOs offer supplementary end-to-end talent services, like recruiting and hiring, employee training and engagement, and performance management, etc.


What kinds of businesses benefit from PEOs?

Small and midsized businesses tend to use the service the most, but larger organizations can also benefit. In fact, PEOs are a good fit for almost all industries, including, but not limited to:

  • Computer services and technology
  • Aviation
  • Finance
  • Retail
  • Real Estate
  • Construction
  • Legal
  • Health Care

Main advantages one PEO can support your business:

  • Free you from HR tasks

The fee you agree to in your agreement with your chosen PEO provides all the necessary HR services for smooth employment.

  • Simplified payroll and tax preparation

Many PEOs handle with the payroll process for you. Payroll is a huge bureaucratic process, so having it managed externally can save you a lot of time and money.

  • Dealing with employee benefits for you

PEO services will make sure your employees are getting the benefits they are legally entitled to in their jurisdiction. This includes things like healthcare and pension plans.

  • Safety for your business

In your arrangement, your staff are employed by the PEO. This, combined with the specialized HR skills of your PEO partner, leads to less employment risks for you and your business.

Take aways

It’s a common myth concerning PEO that employees suffer reduced service under a PEO. Actually PEOs can provide better services, more advanced technologies, and better advantages than would otherwise be available, specificly for small businesses.

Horizons Bulgaria supports companies with HR administration, benefits, payroll and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us now!

Photo credit: Freepik

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