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Simplifying Your Business Cuts Costs, Reduces Liability

By Jeanette Coleman, SPHR & SHRM-SCP on Dec 06, 2022
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Four Ways a PEO Can Help Employers Reduce Costs

Think about all the complex HR work you, as an employer, must tend to – that unending daily tug at your time and attention. Managing essential tasks such as payroll, benefits, HR compliance, and employee onboarding and retention put a relentless strain on company leaders, but they must be done. 

Many companies, wisely, choose to simplify business operations by shifting HR – and the administrative burden that comes with it – to a trusted professional employer organization (PEO) like Axcet HR Solutions. 

PEOs make it easier to be an employer by performing all or some of the small company’s HR functions. 

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Benefits of Working with a PEO

1. More time to focus on revenue-generating activities 

Instead of distracting company leaders, HR becomes a contributor to strategic growth when small companies work with a PEO. Small business owners get back the time they’ve been spending on HR. They can instead shift their attention to customer service, business development and other growth initiatives. 

2. Less stress 

PEO experts leverage industry best practices to ensure accurate payroll, reliable legal compliance, premium employee benefits and turnkey HR administration, without small business leaders having to personally devote hours of every day toward achieving those outcomes. 

3. Higher-quality human resources services 

HR is all a PEO does. Reputable PEOs employ experienced, highly credentialed HR professionals and invest in leading-edge technology that allows them to provide a first-rate employee experience. Because PEOs specialize in HR, they understand ever-changing employment laws, trends and best practices that help small companies compete for top talent. 

RELATED:Struggling Business in Some Areas? Signs You May Need a PEO>> 

4. Greater success 

Independent studies from the National Association of PEOs (NAPEO) show companies that hire PEOs grow 7-9% faster, have 10-14% lower turnover and are 50% less likely to go out of business than small businesses that don’t work with a PEO. 

5. Cost savings 

Often, working with a PEO leads to business expense reductions. HR administrative costs for a small to medium-sized business using a PEO average about $450 less per employee compared to companies that don’t work with PEOs, according to NAPEO. The Association further reports the average annual return on investment from using a PEO is more than 27% in cost reduction alone. 

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PEOs Deliver Big Business Advantages 

Partnering with a qualified PEO enables small businesses in Kansas and Missouri to compete with large companies in the same employee market. It’s a simple strategy: PEOs act as co-employers with clients to provide a range of HR administrative support services, including benefits, payroll and risk management. The business retains control of its day-to-day operations while outsourcing HR to the PEO. 

That said, selecting the best PEO for your small business is not always an easy task. Certification is the differentiator. Axcet belongs to an exclusive club of just 10% of PEOs in the United States that have received certification from the Internal Revenue Service (IRS). 

RELATED: What is a Certified PEO and Why Does Certification Matter >> 

The IRS requires PEOs to demonstrate adherence to stringent criteria to receive certification. The top criteria include financial stability, organizational integrity and proven experience. To remain certified, a PEO must continue to prove they meet these standards each year. 

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The ROI of PEO Services 

PEO outsourcing is an investment that pays off for small businesses. NAPEO reported in late 2019 that the average return on investment for small businesses working with a PEO is 27.3% annually. 

Here is a list of just five of the many ways a PEO partnership can simplify operations and reduce costs for small companies: 

1. Purchase and Administration of Employee Benefits 

Because larger organizations have the resources to purchase better benefits, small businesses are at a disadvantage. That can put small companies in a less favorable position when negotiating with job candidates.  

In November 2018, the American Institute of Certified Public Accountants (AICPA) conducted a survey of adult job seekers and reported some surprising results. Of the more than 2,000 people who responded, 80% prefer strong benefits such as affordable health insurance and generous paid time off over higher salaries. Businesses that cannot meet this need will lose top talent to the competition. 

Axcet brings the collective bargaining power of all its clients to the table when acquiring health insurance, dental insurance and other important benefits. This enables the PEO’s small business clients to offer their employees competitive benefits without the business owner having to oversee benefit plan administration, Affordable Care Act (ACA) management or HR compliance. 

RELATED: Top Benefits of Outsourcing HR Functions to a PEO >> 

2. Help with the Recruitment Process 

Finding quality candidates to apply and interview for open positions is an important and time-consuming process. The best PEO companies for small businesses work with clients to develop an individualized plan for effective recruitment. This includes such things as developing on-point job descriptions and managing an applicant tracking system. Although the interviewing and hiring decisions are always up to the client, outsourcing much of the administrative work to a PEO helps to save considerable time and expense. 

3. Improve Employee Productivity and Retention 

Engaged employees who feel satisfied with their employer and position are essential to long-term retention strategies. Small businesses increasingly turn to PEOs to help improve workplace culture and employee performance. Specifically, PEOs can assist clients with: 

    • Creating new performance appraisals 
    • Providing online resources for employees, such as benefits enrollment and payroll data 
    • Designing reward programs to recognize employees who put in exceptional effort 
    • Developing and implementing new training courses 
    • Supporting clients with ongoing efforts to improve employee performance 

Partnering with a PEO can reduce a small company’s employee turnover rate by up to 14% each year. Turnover creates huge disruption for current employees, not to mention the thousands of dollars small businesses must spend to replace each outbound employee. Working with a PEO is a means of cutting those business costs. 

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4. Unload Complex Payroll Administration 

Payroll and payroll tax administration responsibilities get bigger, more complicated and more costly as a company grows. A PEO like Axcet can take on both the responsibility and accountability for payroll administration, giving employers peace of mind that their employees will be paid exactly what they earned, precisely when they expect it. 

A PEO’s payroll tax administration and payroll compliance services are flexible, secure and, in most cases, provided by a dedicated administrator. With Axcet, state-of-the-art technology also gives client employees 24/7 access to their personal payroll information from any device. 

RELATED:5 Best Practices for Pain-Free Payroll Processing >> 

5. Manage Compliance Issues 

With limited resources, keeping up with compliance regulations can be a full-time job for any business. Congress seems to add more compliance regulations each year that employers must abide by or face fines, business closure, lawsuits or other consequences. 

Workplace safety compliance is particularly thorny. Keeping employees safe is both a moral and a legal obligation. It requires proactive, ongoing risk management, both to help prevent accidents and to mitigate claims losses. 

A PEO like Axcet can help smaller employers develop safety policies and implement practices that contribute to a safer workplace. A PEO’s safety professionals also can train employees to understand the importance of following established protocols. 

Starting with a risk assessment and mock OSHA audit, the safety team at Axcet helps small businesses identify and address safety deficiencies before they turn into problems – or, if a smaller company already has received an OSHA citation, Axcet helps the company understand its rights, responsibilities and options to minimize financial penalties. A PEO like Axcet also can provide workers’ compensation insurance and, if a claim is filed, help the small company manage the claim and contain costs. 

What is a PEO Need to Know Information

Axcet provides a full suite of PEO services and expertise to help grow your business. Partnering with a trusted PEO like Axcet for day-to-day HR needs translates to a smoother-running operation, more time for expansion efforts and a higher-performing workforce. 

Axcet HR Solutions invites employers with fewer than 250 employees to request a consultation to learn more about our HR, benefits administration, payroll, risk management and compliance services. As a proud Midwestern business since 1988, we look forward to helping our small business neighbors succeed. 

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