What is a Professional Employer Organization (PEO)?

Professional employer organizations (PEOs) partner with small businesses to provide payroll, benefits and human resources support. They operate under a co-employment model where you will still have control of all your employees, but employees legally appear on the PEO’s books for tax and compliance purposes. There are several advantages to working with a PEO, which range from sustained growth to saved time. As your business expands and the demands of growth weigh on your day-to-day responsibilities, PEOs can take time-consuming, routine processes off your plate.

“Of the current clients we randomly surveyed, 98 percent said they’d recommend a PEO to another small business,” said Pat Cleary, president of NAPEO.

NAPEO is a national organization that represents PEO interests and studies the PEO industry. Its most recent white paper had some major findings for small business owners, including that SMBs that partner with PEOs are more profitable and grow faster.

Small business owners “worry about growth,” Cleary said. “Companies that use a PEO – 14 percent higher growth there.”

There are a lot of potential reasons to consider working with a PEO. From improved payroll processes to more attractive benefits, these companies can be a game changer for attracting new workers and growing your business. Before diving in to which PEO is right for you, it’s important to understand what a PEO is and how it serves small businesses.