Play Audio
Why Use a PEO Instead of an HR Person

Choosing Efficiency: Why Use a PEO Over an In-House HR Person

By Laura Dowling, SPHR on Dec 12, 2023
4 min read 2 Comments

Share this:

Why It Makes Sense To Hire a PEO Instead of an HR Person

Are you pondering over 'Why use a PEO' instead of hiring a traditional HR person for your small to mid-sized business? You're not alone in this decision-making process. Many business owners are discovering the significant benefits of partnering with a professional employer organization (PEO). 

From cost savings to enhanced HR capabilities, we'll take a deep dive into why a PEO offers a more comprehensive solution that can lead your business toward greater efficiency and success than a traditional in-house HR approach. 

RELATED: PEO Services Help Small Companies Thrive >>

Does PEO Outsourcing Replace HR? 

Does a PEO replace an internal HR person or team? The short answer here is yes, depending on the size and specific needs of the business. Let's take a deeper look:

When considering the question, 'Does a PEO replace an HR team?' the answer varies depending on the size and specific needs of your business.

Businesses with fewer than 20 employees

For small businesses (those with 20 or fewer employees), the role of a PEO often extends to encompass the entire range of HR functions. In this scenario, a PEO effectively replaces the need for an in-house HR team, offering a comprehensive solution for managing payroll, benefits, compliance and other HR-related tasks.

For many small businesses, having a full-time HR person can be cost-prohibitive. It is simply not in the budget, at least not comfortably so. Whereas, working with a PEO will help save money in the long run and can provide greater flexibility as your company grows.

So, why use a PEO instead of an HR person? Because this setup is particularly advantageous for small businesses due to its cost-effectiveness and the access it provides to a broader range of employee benefits and HR expertise.

RELATED: How a PEO Creates Scalable HR Infrastructure for Small Businesses >>

Businesses with 50 or more employees

On the other hand, for medium-sized businesses (those with 50 or more employees), the situation may differ. For this size of business, where the complexity and scale of operations might warrant it, a PEO can either work alongside an HR manager or a small HR team or provide a comprehensive outsourced HR solution. 

In this instance where the business already has an in-house HR manager, the PEO services would complement, not overpower, those services that an HR person provides, ultimately supplementing them with added expertise and allowing them to focus on broader organizational goals.

For example, certified PEOs, like Axcet HR Solutions, can provide support for the tasks that require in-depth knowledge, like payroll taxes and processing, employee benefits administration, workers' compensation claim management, workplace safety, OSHA compliance and compliance with other federal, state and local laws.

This collaborative approach leverages the strengths of both the PEO and the in-house HR, ensuring a more comprehensive HR management strategy.

In essence, the role of a PEO in replacing or complementing an HR team is tailored to the scale and specific requirements of your business, whether small or medium-sized. 

professional employer organizations PEOs for management training programs

Why Use a PEO 

  • PEO Firms Are Well-Vetted  

    You have the peace of mind that comes with accreditation and certification. When you partner with a company such Axcet HR Solutions, you know that we’ve undergone a thorough and rigorous process with the IRS and are therefore   designated a certified PEO (CPEO). What this means for you is that should any issues arise as far as employment taxes, the responsibility falls to us to take care of any such situation. A CPEO is a firm that meets certain tax, income and other financial criteria--all highly beneficial to your business. 

  • Complete HR Solutions

    For many small businesses, especially those without the resources or need for a dedicated in-house HR team, a PEO can effectively assume the role of the entire HR department - and at an expert level. They manage a broad range of HR functions including payroll, benefits administration, compliance and risk management providing a built-in team ready to work for you.

    RELATED: Top Benefits of Hiring SHRM or HRCI Certified HR Consultants >>
  • Cost-effective HR management

    Small businesses benefit from the cost-effectiveness of a PEO, as it allows them to access comprehensive HR services without the overhead associated with full-time HR staff.
  • Access to Better Benefits and Resources

    Why use a PEO for benefits? PEOs enable small businesses to offer their employees a range of benefits and resources typically available only to larger companies, which can be a significant advantage in attracting and retaining talent.

    Just how serious are the healthcare savings when using a PEO? The National Association of Professional Employer Organizations puts the average annual health benefits cost savings per employee for small businesses that use a PEO at 37%.

  • Compliance & risk reduction

    For small business owners, keeping up with the latest employment laws and regulations can be overwhelming. A PEO handles these aspects, significantly reducing the legal risks and compliance burdens for the business.

benefits of a peo six lesser known services that can transform your business

PEO Outsourcing Provides Unique Advantages

When you decide to go with a PEO firm, you get the advantage of all it can offer your business in conjunction with the money a PEO can save you over time. You don’t have to compete for those HR professionals who are highly sought after in your industry and market. You don’t have to come up with a salary that your company just can’t afford right now. Instead, you can work with a well-established, affordable PEO firm that has your best interests at heart. 

At Axcet, we have been working with Kansas City area business owners for more than 35 years, helping them manage their HR services, stay compliant with employment rules and regulations, and find the best rates available when it comes to benefits and insurance premiums. 

Whether you have an in-house HR team or are building your HR game plan from scratch, we would love to help you handle HR more efficiently. Contact us today to learn more about the many answers to the question, “Why use a PEO?”

New call-to-action

Written by Laura Dowling, SPHR

Get HR Updates

Table of Contents

Nurturing Talent: 7 Employee Learning & Development Strategies

employee learning and development
hybrid work statistics

Hybrid Work Statistics: What the Numbers Say About Today's Workforce

Let us know what you think...