A Professional Employer Organization or PEO uses their service agreement to create a shared employment relationship with the client to assist in the areas of payroll, employee benefits, workers’ compensation and human resource administration. By creating the shared employment relationship, the client’s employees are pooled with the PEO’s current employees to give them large group buying power. The PEO handles payroll, taxes and unemployment administration, human resources compliance as well as compliance with the Affordable Healthcare Act regulations. This tremendous benefit greatly reduces the work associated with day-to-day HR, allowing the client to focus on profit generating areas of their business. 

A PEO can do as much or as little as you’d like. PEO services include payroll administration, managing compliance and taxes, procuring employee benefits including hiring and firing employees, payroll administration, overseeing compliance and taxes, and procuring employee benefits like access to healthcare coverage and retirement plans.  

When a business contracts with a PEO, the PEO will co-employ the company’s employees. This means the PEO can report, collect and remit employment taxes, issue W-2s for the employees, and remit wages and withholdings for the worksite employees. Most PEOs also provide a complete HR and benefit package for employees, enabling the company to retain top talent and foster a positive work environment.

When you partner with a PEO for your business, you’re outsourcing employee management and a lot of the headaches that go along with it, so you can free up your time and resources to focus on the profit-generating parts of your business and grow your business. 

By creating the shared employment relationship, the business gains from the PEO’s large group buying power. This results in greatly reduced premiums for employee related insurances and benefits, as well as reduced HR administration costs. 

Absolutely! When a company partners with a PEO, the employees have access to competitive Fortune 500 packages including but not limited to medical, dental, vision, group life, LTD, STD, pet insurance, retirement plans, FSA, HSA, employee perks programs, and more. 

PEOs service businesses across a broad range of industries, from accounting firms, to physicians’ offices, to plumbing companies. Businesses that are too small to qualify for affordable benefits, can’t spare the time or personnel to manage HR, and engage in high-risk work, can especially benefit from a PEO.

Not at all! The business owner retains complete direction and control of their employees. Owner hires, fires, promotes, demotes, and dictates what takes place within the workplace. The PEO’s authority is limited to HR administrative related tasks and responsibilities. 

Choosing the PEO that’s right for your business can be tricky. There are so many variables to consider, and the wrong choice can be disadvantageous to your business. No worries, though; ARC PEO can do all the legwork for you. We shop a hand-picked selection of the best PEOs in the United States and work with you to find the PEO that best suits your needs.

Confused by all the terminology that is thrown around when discussing HR and PEOs? Check out our glossary for a complete breakdown of all the terms you need or want to know.