A professional employer organization (PEO) provides outsourced HR services to small and medium-sized businesses (SMBs). HR services usually include payroll processing and tax filing, 401(k) administration, help with regulatory compliance, health benefits, workers’ compensation insurance and more. Businesses that work with a PEO sign a co-employment agreement, which allows the PEO to become the employer of Record (EoR) for tax purposes and workers’ compensation coverage. PEOs provide this service at a surprisingly low-rate, often saving small businesses a considerable amount of money. Let’s take a look at the top 5 ways that PEOs can help businesses save money.
How a PEO Helps Businesses Save Money
1. Frees up the business owner to pursue sales/business growth
Small business owners often take on many roles, especially in the early days of their business. But most business owners are not HR experts, and even if they are, taking on HR tasks can be very time consuming. When a business owner partners with a PEO, it frees up time to handle other important daily tasks and pursue sales/business growth.
2. Avoiding expensive mistakes
Businesses that don’t know how to properly handle HR paperwork, training initiatives or workplace safety protocol, can end up making very expensive mistakes in the form of Workers’ Compensation claims, lawsuits or mishandled finances. A PEO is there to ensure that HR tasks are handled properly and by the book so expensive errors can be avoided.
3. Preventing compliance issues
PEOs are responsible for making sure that the companies they partner with are following all federal and local regulations. When a business breaks business laws or Hawaii labor laws, they are opening themselves up for fines, court fees and lawsuits. This risk is preventable with a PEO by your side.
4. Increased employee retention
PEOs have been shown to lower employee turnover by 10%-14%. High rates of employee turnover are very expensive but employees who are happy with the work environment, pay and benefits are more likely to be loyal. PEOs can help small businesses provide their employees with better services at more affordable prices. This is especially true when it comes to health benefits. Because PEOs have a larger number of employees in their benefits package pool than one small business may have on its own, PEOs can offer a higher tier of health benefits for a lower cost. This allows small businesses to compete more equally with the benefits offered by large businesses.
5. Small businesses that partner with a PEO save an average of 35% on HR administration
Most companies save money by partnering with a PEO because they eliminate the need to hire an in-house HR Team. Even the cost of a full-time HR manager can exceed the cost of partnering with a PEO. PEOs usually charge a flat fee calculated per employee, per year or a fee calculated as a percentage of the company’s overall payroll per year.
Outsourced HR services can boost the efficiency of your company’s HR tasks, saving money on unnecessary tasks and costly mistakes. This savings can then be used to help your company grow!
Are you ready to start saving money? Join us! When you partner with Makai HR you can get on with the business you are trying to grow while we take care of your employee needs from payroll to taxes, health insurance/benefits and worker’s compensation. You also gain peace of mind that you are compliant with all of Hawaii’s employer laws (if you’ve ever looked you know that the list is very long). When choosing a PEO to partner with, there are many things to consider including cost, services and technology solutions.
With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet or phone. We can truly improve your employees work benefits while freeing you up to run your business.
What are you waiting for? Companies that partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!