.webp?width=1200&height=800&name=full-service-peo-partnership%20(1).webp)
Are you considering exploring a PEO partnership? A relationship with a PEO is a popular choice for small to mid-sized businesses because of the unique benefits and cost savings PEOs can offer these organizations.
However, not all PEOs are created equal. Before you make your choice, you should have a “lay of the land” and a true understanding of what the differing PEOs competing to serve you can truly offer.
PEOs are often distinguished by the level of service they provide, the comprehensiveness of their offerings, and their status within the IRS’ PEO certification registry. In this post, we’ll break down these differences so you can make an informed decision about a PEO partnership.
RELATED: What is Co-Employment? (Yes, You’re Still the Boss) >>
“PEO” stands for “professional employer organization.” In their most simple form, PEOs serve as the employer of record (or EoR) of their client’s employees for tax purposes in an arrangement called “co-employment.”
As part of the co-employment arrangement, the PEO will file payroll taxes for its clients’ employees under its own tax identification numbers, taking responsibility for withholding taxes, unemployment insurance taxes, and providing workers’ compensation coverage.
This relationship, which defines the chief services provided by a PEO, earns an organization its name as a “professional employer organization.”
If you’re considering a PEO partnership, it’s important to understand the distinction between a regular and “full-service” PEO partnership.
Not all PEOs are equipped to handle everything a small to mid-sized business needs from them. Within the PEO industry, levels of service may vary, with lesser PEOs ushering clients into online chats or call centers for support rather than servicing their accounts with live, dedicated staff.
Some PEOs won’t allow clients to meet with staff in person, will skimp on service personalization, and won’t understand that each client organization is a unique institution with its own culture and needs.
A full-service PEO, on the other hand, will supply its clients with dedicated points of contact who understand a client organization’s industry, business, and workplace culture from the inside out.
Full-service PEOs take a proactive and highly customized approach to the PEO relationship, seeking to complement their client’s culture with their expertise. These PEOs serve as a true partner to your business in the HR sphere and beyond, defining the concept of a “PEO partnership.”
RELATED: PEO Cost Considerations - Is It Worth the Investment? >>
As you’re exploring PEO partnership options, you should be familiar with the concept of PEO certification. Not all PEOs are certified. According to Forbes, while there are over 900 professional employer organizations in operation in the United States, fewer than 10% are certified PEOs (based on data from the National Association of Professional Employer Organizations (NAPEO).
A certified PEO has met strict background, reporting, ethical, legal, and financial requirements set by the Internal Revenue Service (IRS). The IRS check (and maintenance) process to achieve certified PEO status is purposely intensive and meant to ensure that a PEO is financially stable, responsible, and reliable. The certification affords client organizations a level of trust they can rely on.
When client organizations work with a certified PEO, they avail themselves of the financial protections and tax benefits that clients of non-certified PEOs may not receive.
For example, certified PEOs maintain responsibility for the payment of federal employment taxes. Certified PEOs must maintain bonds equal to 5% of the certified PEO liability, with a minimum of $50,000 and a max of $1,000,000 to guarantee payment of any federal employment tax liability. Meanwhile, the clients of certified PEOs maintain the ability to claim specific tax credits.
A full-service PEO partnership can take your organization to the next level. Here are just a few of the many task “buckets” a full-service PEO can manage for your small to mid-sized business:
Axcet HR Solutions is a full-service, certified Professional Employer Organization that can help you with a full suite of HR tasks, including tasks in all of the areas mentioned above. Axcet strives to provide service that is proactive, transparent, and puts the needs of our client organizations first. Schedule a consultation with our team today to find out how we can help.
.png){kind=logo}
Let us know what you think...