7 Ways Small Businesses Benefit from a PEO

7 Ways Small Businesses Benefit from a PEO

The number of small and medium-sized employers using professional employer organizations (PEO) continues to increase each year. Often, it is thought that the growth of the PEO industry is due mainly to the benefits business owners see from this partnership. However, owners aren’t the only ones who gain from working with a PEO. 

Small business employees, too, stand to benefit from the services and solutions offered by PEOs today. Let’s take a look at a few examples of the positive outcomes that small business workers see when their employer works with a PEO.

1. Better Benefits 

One of the most well-known advantages to using a PEO is gaining improved, modern benefits and perks. And while better benefits help employers retain and recruit talent, these enhanced perks often provide even greater for employees.

When working with a PEO, employees are given access to a wide-variety of personalized benefits, including:

  • Health insurance
  • Retirement benefits
  • Voluntary benefits (pet insurance, identity theft protection, financial and legal programs, telehealth programs, etc.)
  • Complimentary benefits (discount programs, employee assistance programs, etc.)

By having solid HR policies, a comprehensive benefit package, and employee perks, you are able to create a safe and happy workplace that helps you attract quality employees and retain them to reduce the cost of turnover.

2. Workers’ Compensation Savings

Over the last few years, the workers’ compensation market has gotten a lot tougher for business owners. PEOs help businesses secure competitive rates for workers’ compensation insurance. That can sometimes be challenging for start-up companies, companies with past losses or those with high-risk jobs. PEOs have flexible workers’ compensation programs with more affordable rates than stand-alone policies and staff who help manage the cost of claims, coordinate return-to-work programs and recommend safety training

In most cases, it will be a more cost effective option than the traditional market can offer. We can also include Employment Practices Liability insurance which covers lawsuits arising from wrongful termination, discrimination, and sexual harassment. Issues that are becoming more common in today’s workplace. 

3. Solve HR Issues  

Federal, state and local regulations related to HR are more voluminous and complex than ever. Most businesses don’t have the staff for the in-depth subject matter expertise needed to adequately navigate wage and hour regulations and ensure compliance with the full range of employment and tax laws. When small and mid-sized businesses work with a PEO, they get a team of compliance experts who stay current with all the rules and regulations that apply to employers. 

A PEO also helps manage HR risk by helping clients:

  • Create an employee handbook to include anti-discrimination and harassment policies
  • Familiarize themselves with wage and hour laws
  • Pay employees in accordance with the law
  • Pay employees in a timely manner 

4. Compliance Relief 

PEOs are responsible for staying up-to-date on the latest federal and state labor laws and  regulations. This not only saves you time, but also the frustration that comes with trying to make sense of and implement many of these changes. 

By staying up-to-date on these changes, you can avoid hefty fines and disgruntled employees.

5. Modern HR Tech

 This desire for modern technology has also become an expectation for HR tasks that employees are asked to perform, such as requesting PTO, going through benefit enrollment, and submitted their hours.

The majority of PEOs offer their clients the kind of HR tech that employees want and need. Some even have mobile apps that make tasks as simple as possible for employees!

And most PEOs, through their HR technology, can offer small business employees learning and development programs and software that much larger organizations use.

A great HRIS System is fundamental today. By meeting employee expectations, employers help boost the happiness and ultimately retention of their workforce.

6. Employee Happiness

 Enhanced benefits, robust learning and development programs, and easy-to-use, modern technology all help to boost the employee experience.

 For employees, increased happiness makes their connection to their work and employer greater. And for employers, happy employees mean improved productivity and lesser chance of turnover – studies from the National Association of Professional Employer Organizations (NAPEO) have shown that PEOs help their clients reduce turnover by 10% to 14%.

 A happier workplace and workforce are good outcomes for everyone and working with a PEO can help achieve these goals!

7. Competitive Business and Personal PEO Insurance Quotes 

360PEO can also provide competitive quotes on all of your personal insurance needs. We work with several industry partners to help clients find coverage for many commercial lines of insurance, such as Group Long Term Care Insurance, Executive Benefits, General Liability, Property, and Commercial Auto.

 We also offer personal lines insurance such as renter’s policies, home insurance, and life insurance.  


Learn how our PEO Partnership can help your group please contact us at info@360peo.com or (855)667-4621.

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PEO – What are the stats?

PEO – What are the stats?

PEO - What are the stats? Industry statistics.
  • The 3.7 million Worksite Employees employed by PEOs earned a total of $176 billion.
  • They represent 15 percent of all employment by private sector employers that have 10 to 99 employees (chosen because this is the size range of most PEO clients) and 2.4 percent of civilian employment in the United States.
  • Between 2008 and 2017, the number of worksite employees employed in the PEO industry grew at a compounded annual rate of 8.3 percent. This is roughly 14 times higher than the compounded annual growth rate of employment in the economy overall during the same period.
  • The total employment represented by the PEO industry is roughly the same as the combined number of employees for Walmart (United States only), Amazon, IBM, FedEx, Starbucks, AT&T, Wells Fargo, Apple, and Google. Those companies include the two largest retailers, the largest technology company, the largest transportation company, the largest telecommunications provider, the largest financial services firm, the largest specialty restaurant chain, plus the two most highly valued firms in the world based on stock market valuation.
Key Findings
  • Businesses in a PEO arrangement grow 7-9 percent faster, have 10-14 percent lower turnover, and are 50 percent less likely to go out of business.
  • PEOs are able to offer a broad array of HR services at a lower cost, and offer access to retirement plans to small businesses that may not otherwise sponsor them.
  • PEOs provide services to 175,000 small and mid-sized businesses, employing 3.7 million people.
  • There are 907 PEOs in the U.S.
  • Administrative costs are around $450 lower per employee for businesses that use a PEO.
What is Co-Emplyment

The PEO relationship involves a contractual allocation and sharing of certain employer responsibilities between the PEO and the client, as delineated in a contract typically called a client service agreement (CSA).

For the obligations a PEO agrees to take on with respect to its clients, the PEO assumes specific employer rights, responsibilities, and risks through the establishment and maintenance of a relationship with the workers of the client. More specifically, a PEO establishes a contractual relationship with its clients whereby the PEO:

  • May assume certain employment responsibilities for specified purposes regarding the workers at the client locations.

  • May reserve a right of direction and control of the employees with respect to particular matters.
  • Shares or allocates employment responsibilities with the client in a manner consistent with the client maintaining its responsibility for its product or service.
  • Remits wages and withholdings of the client’s workers.
  • Issues Form W-2s for the compensation paid under its Employer Identification Number.
  • Reports, collects and deposits employment taxes with local, state and federal authorities.


A PEO provides integrated services to effectively manage critical human resource responsibilities and employer risks for clients. A PEO delivers these services by establishing relationships with the client’s employees and administering certain employer rights, responsibilities, and risks as agreed with the client.


The roles of the PEO and the client depend upon the facts and circumstances of each relationship — that is, each obligation should be examined individually as employment responsibilities are assigned in the parties’ CSA.  Each party will be responsible for certain obligations of employment, while both parties might share responsibility for other obligations and be “an” employer, but neither party is “the” employer for all purposes.


Both the PEO and the client company establish a relationship with worksite employees. The PEO might engage with worksite employees with respect to specific matters involving human resource management and compliance with employment requirements, while the client company directs and controls worksite employees in the client’s day-to-day operations as well as the manufacturing, production, and delivery of its products and services.


The client company provides worksite employees with the tools, instruments, and places to work. Some PEOs provide assistance and suggestions to clients when it comes to offering worksite employees a workplace that is safe, conducive to productivity and operated with best practices with employment rules and regulations.  Additionally, the PEO assists clients and worksite employees with workers’ compensation insurance and a broad range of employee benefits programs.


PEOs create a real relationship with worksite employees over certain matters. This relationship exists in fact, not just in form. PEOs often assist with the risks attendant to the personnel functions of the worksite employees. PEOs manage liabilities by monitoring new employment trends and requirements and developing policies and procedures for their clients and the worksite employees, as stated in the client service agreement.  

*information provided by NAPEO An Economic Analysis: The PEO Industry Footprint in 2018 Whitepaper. https://www.napeo.org/

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PEO vs. Employee Leasing. What’s the Difference?

PEO vs. Employee Leasing. What’s the Difference?

PEO vs. Employee Leasing. What’s the Difference?

Whats the difference of a PEO and Employee Leasing?

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A common question asked “PEO and Employee Leasing. What’s the Difference?” Despite the growth within the PEO industry and the increased usage of them by small businesses, there are still some misconceptions around PEOs. One myth seems to come up more often than others –  a PEO relationship and employee leasing are the same.

This confusion most likely stems from the relationship that actually exists between a PEO and its client, called co-employment. And while many think employee leasing and co-employment are one in the same, they are actually very different.

In order to clear up the misunderstanding, let’s take a closer look at both employee leasing and co-employment. How they differ from one another, and why PEOs aren’t the same as an employee leasing company.

What is Employee Leasing?

First, let’s define employee leasing. Also known as a temporary employment arrangement, it’s the practice of supplying new workers or contractors usually on a temporary basis. Often times employee leasing is for work on a specific project that has a start and end date.

Employee leasing is most often associated with staffing firms, although it also gets tied incorrectly to PEOs and HR outsourcing.

When a business works with a staffing company that uses employee leasing, the staffing firm provides workers to their client who do their work at the client’s place of business. Once the project, timeframe, or contract is complete, the workers return to the staffing company, who is their actual employer.

Employee leasing is a popular option for business owners who need new workers for a set time frame.  A common strategy of 85% FT and 15% Temping is used.  A popular option for Employers who don’t want to worry about the HR administrative and regulatory tasks associated with hiring contract or temporary workers.

What is Co-Employment?

The National Association of Professional Employer Organizations (NAPEO) defines co-employment as “the contractual allocation and sharing of certain employer responsibilities between the PEO and the client.” Essentially, in a co-employment relationship, employees are employed by two different entities – the client and the PEO.

However, the PEO does not supply workers to their client. All employees are either currently with the client, or future employees who are hired by the client.

In a co-employment relationship, a PEO assumes certain employer rights, responsibilities, risk, and other HR administrative tasks. These can include:

  • Remitting wages and withholdings of the clients’ workers
  • Issuing Form W-2 for compensation under its Employer Identification Number
  • Reporting, collecting, and depositing employment taxes with local, state, and federal authorities

Meanwhile, the client retains control over the hiring and firing of its employees, and business leaders continue to make the day-to-day operating decisions for their company.

Co-employment Through a PEO and Employee Leasing Are Not the Same

We have already mentioned that one of the biggest myths about PEOs is that the relationship they have with clients is employee leasing. When you take a look at the differences between employee leasing and co-employment (which is how PEOs operate), it becomes clear that this myth is far from the truth.

  • As a matter of fact, employee leasing and co-employment differ greatly. The biggest difference is that in co-employment relationship through a PEO, the PEO does not provide staff for their client. This responsibility falls on the client, as does any other staff-related decisions. This includes hiring new talent after the PEO partnership is established.
  • Instead of being a leased or temporary worker, employees end up having two employers – the company who hired them AND the professional employer organization. The PEO becomes the company of record for HR, payroll, benefits, employment taxes, and other HR-related purposes.
  • It’s very important to keep in mind that in a PEO partnership, small business owners do not lose control of various aspects of their business, including their employees and hiring/firing decisions. This is another common misconception about PEOs. Business owners retain full-control of their business, while the PEO handles the administrative side of human resources.

Don’t Let This Common PEO Myth Prevent Business Growth and Success

Working with a PEO, especially a Certified PEO, ensures small business owners that they remain compliant with all HR and employment related laws and regulations. Instead of having to worry about HR, business leaders can focus all their efforts on other activities that can grow the company.

Working with a PEO also provides small businesses with access to much improved health insurance and employee benefit offerings, greatly assisting with recruiting and employee retention. PEO partnerships allow small business owners to maintain control of their company, and hire new employees as they see fit.

It’s a misconception that PEO and employee leasing are the same, which often times causes small business owners and brokers to dismiss a PEO solution, even though a perfect fit exists. Hopefully this article clears up the confusion surrounding co-employment and employee leasing.

Who knows, perhaps a PEO solution can be a competitive advantage for your business. Click here to get started on a PEO quote.

Want to learn more about PEOs? Check out PEO White PapersThis provides an overview of the PEO industry as well as helpful information employers!

White Papers PEO Small Business Growth McBassiWhite PaperOne

No Tax Restarts

No Tax Restarts

No Tax Restarts

No need to wait till next Jan 1st to make changes.  No tax restarts are good news for PEO prospective groups. Federal Tax Restarts Are No Longer An Issue  The significant added expense of having to pay tax restarts often postponed or ended the PEO conversation for many of our prospective clients. It was an important consideration since companies were not eligible for tax restart credits and the cost of the restarts often diminished the financial value proposition of partnering with a PEO.

Example: A group starting a plan in May would have to pay for annual FICA and FUTA all over again with new PEO. A PEO is considered a different employer group.

Moving forward, there are no federal tax restarts to worry about. FICA and FUTA wage bases will not restart when an employer joins a PEO. Ask us about our Quick Start Program to ensure a smooth start to our personalized PEO model, and offers perks for your staff.

Contact us to learn more about our Quick Start Program on-boarding processs but here are the high points:

  1. You’ll have access to the best healthcare providers, coupled with the pricing that is offered to much larger companies.
  2. Your Worker’s Compensation rate may favorably adjust since you will be “adopted” under the PEO and their typically much better rates.
  3. You’ll have a partner that will help build systems for recruiting, hiring, employee administration and more.
  4. You’ll also have experts who will work with you to establish and maintain policies and programs, including workplace safety, sexual harassment, diversity and others that are typically required by law.

While this certainly is not going to fix everything in the ever growing PEO industry, it’s a huge leap forward and offers clarity. If you would like to explore how a PEO can help your company, contact us and we will be happy to help you.

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