Running a small or mid-sized business involves significant responsibility. Especially when you are first starting out, a lot of the responsibility for tax administration, payroll, employee benefits, and workers’ compensation falls on you. A professional employer organization can help to ease the burden.

How Does a PEO Work?

You pay a fee to the PEO and enter into a contractual agreement to share the responsibilities of managing the business. The PEO takes on the responsibility for many of the human resource aspects of running your business, including taxes, payroll, workers’ compensation, and employee benefits. However, you retain responsibility for managing the work performed by your employees on a day-to-day basis. The name for this sharing of duties between you and the PEO is called co-employment.

What Are the Benefits of a PEO?

A master insurance policy covers workers comp in PEO’s. Claims management and loss control are typically offered as part of a suite of HR management services. The PEO will pay your taxes, payroll, and benefits out of the fee that you pay to participate in the organization. Working with a PEO decreases the likelihood that you will go out of business by 50%. You may also see less employee turnover by 10% to 14% and 7% to 9% faster growth.