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  • Running a business comes with more responsibility than most people realize. The administrative requirements to stay compliant while growing a successful business can overwhelm most. Some business owners will hire office managers, an HR generalist, interns, etc., but some completely put off the HR needs of their company. This can cause major issues down the line with compliance issues, payroll dilemmas, job description disputes, and the list goes on.

    The Professional Employer Organization (PEO) industry exists to help business owners outsource their back-office functions to focus on the real reason they developed their company, which is to generate revenue. 

    A happy small business owner who outsources key business functions to a PEO. 

    Five Indicators That it Might be Time to Partner with a PEO

    The administrative functions of running your business have become overwhelming

    If you’re trying to find more hours in the day for you and your staff, using a PEO may be a good way for you to free up time. Many growing businesses find it hard to maintain efficient administrative processes as they expand. GMS can help streamline the payroll process, handle compliance issues, assist with employee recruitment, provide salary analysis, and much more.

    You aren’t 100 percent confident that your business is compliant with State and Federal regulations

    Face it, the business of being a business owner has become more and more complicated with rising costs and liabilities of having employees. Just through the Affordable Care Act alone, there have been about 900 new regulations enacted in recent years. Are you aware of all the changes? GMS provides the HR expertise with a designated and certified account manager attached to an HRIS platform to ensure compliance with all federal and state employment regulations.

    You lack the financial resources to develop a full HR department

    Building an HR department can be time-consuming and expensive. The median salary for a Human Resource Manager is $110,112 per the Bureau of Labor Statistics. Depending on the need, an in-house department can involve hiring an HR Director, using a payroll company, securing an EPLI policy, paying a 401(k) audit fee, and paying attorney fees, all of which can add up quickly. GMS can often provide a broad array of services and qualified experts without having to hire internally.

    You want to focus more on the growth of your business

    Outsourcing the daily administrative aspects of running your business frees you up to focus your attention on growing your business. You retain full control over decision-making, employee responsibilities, core job functions and requirements, hiring decisions, and the structure of your organization. While GMS can offer input in these areas, you remain in control of all final decisions. This is the foundation of the co-employment relationship that GMS creates with its clients.

    You’re in a high-risk industry

    Small businesses can be paralyzed by compliance requirements with labor laws, tax reporting, and workers’ compensation insurance. The list of acronyms – like FSLA, FMLA, EEOC, HIPPA, PPACA, FUTA, and SUTA – are enough to cover the entire alphabet while overwhelming any business owner. If you have employees, you must provide them with workers’ compensation insurance that will pay wages and medical expenses in the event of hours lost because of workplace injuries. By partnering with a PEO, you can rest assured that your business and your employees are protected.

    Ease Your Workload and Strengthen Your Business at the Same Time with a PEO 

    Businesses are created from a passion, and that passion doesn’t usually include handling all the administrative functions required to keep your business running. GMS takes those burdens off the business owner, so they can focus on the core functions of their business. Contact us today to see how we can make your business simpler, safer, and stronger!

  • In the 12 years that I’ve been working for GMS, I’ve met with thousands of business owners in hundreds of industries. While every company has their unique problems and issues, some issues tend to be universal.  In the 26 years that GMS has been in business, we have found that most business owners… 

    • Think they’re paying too much in worker’s compensation premiums and not getting enough in return for it.
    • Want to offer their employees great health insurance, but don’t want to pay the ridiculous premiums being charged.
    • Don’t fight their unemployment claims because “it’s just not worth it and they’re going to get it anyway.”
    • Hate the stupid bureaucratic paperwork they have to go through, keeping them from more important tasks.
    • Have trouble finding good employees.
    • Have a hard time keeping them when they do find them because they’re losing them to other companies with better wages and benefits.

    Did I miss anything?

    A small business growing with the help of a PEO serving as an outsourced HR department. 

    Why Do Big Competitors Have an Advantage?

    So now, small business owners often compete against bigger companies and are at a distinct disadvantage. Why? Because large companies tend to have a few things that small businesses don’t:

    • A payroll department that pays the employees, takes care of their W-2s, does all their quarterly filings, etc.
    • An internal benefits department that gets the best rates for them on their ancillary benefits and 401k, and is more often than not, self-insured for their healthcare, giving them the data they need to better manage their benefits and control those costs.
    • An internal risk department that manages all their workers’ comp and unemployment claims and has the legal power to contest claims that they feel are fraudulent.
    • An HR department that handles the entire lifecycle of an employee from the recruiting, either done internally or through a service, onboarding, training, and eventual separation by departure or retirement.

    How You Can Compete

    Fortunately, there are measures you can take to stand with the competition. If you’re like most companies your size, you can:

    • Hire an accountant or a payroll service to handle your payroll.
    • Use a broker for your benefits and rely on your accountant or financial advisor to set you up with the best possible retirement plan option.
    • Sign up with a TPA or insurance broker to manage your worker’s comp, hoping for the best possible discount and then pray you don’t lose it.
    • Waste your time fighting unemployment claims, or worse yet, don’t contest them at all.
    • Use a recruiter, word of mouth or a sign in your front yard trying to find help and then hope that you’re doing all the right things from a regulatory standpoint.

    Well, that’s why the PEO industry, Professional Employer Organization, was created back in the 1970s and has grown to a $176 billion industry and why GMS is rapidly becoming one of the largest PEOs in the country. By acting as an outsourced HR department, our clients get all the same benefits of a large company and you can get:  

    • An internal payroll department that takes on all the tax liability of your employees.
    • A benefits department that can get you the best rates and possibly even into a self-insured healthcare plan with minimal risk. You also have the option of a 401k plan that is low cost and relieves you of fiduciary responsibility.
    • A risk management department that is self-insured for worker’s comp, providing better rates as well as complimentary legal service on all claims, both for worker’s comp and unemployment.
    • An HR department that handles everything from the onboarding of employees to termination and everything in between as well as keeping you compliant with all government regulations.

    The best part is that you’re getting all these specialists for less than it would cost you to hire one of them in even a part-time capacity. At its basic level, a PEO consolidates your vendors, increases your buying power, and provides HR support and recruiting assistance to help you in that growth. How do we do that? Through the PEO relationship.

    We partner with our clients and mutually share or co-employ our clients’ employees. By adding their employees to our PEO, GMS is a 26,000-employee company that has the leverage to be self-insured for our worker’s comp and healthcare and get better rates on everything from 401k to vision, dental, life, disability, drug testing, background checks, etc.  Virtually everything necessary for employee management.

    Contact GMS today to talk to one of our experts about what we can do to level the playing field for your business.

  • It’s no secret that HR management is an extremely complex and time-consuming process for any small business. That’s why many small business owners turn to Professional Employer Organizations (PEOs) to help companies take control of key HR functions like payroll and employee benefits. Of course, there’s one major question for anyone interested in these services: How much does a PEO cost? 

    PEO pricing can vary greatly depending on the PEO you work with and the services you need. Regardless of your needs, it’s critical to partner with a PEO that can not only simplify your business’ HR needs, but also save your organization more money than you spend. Let’s break down how PEO pricing works and what you can expect to pay for HR outsourcing.

    A notebook containing PEO costs. 

    What Do You Pay for When Partnering with a PEO?

    There are multiple factors that impact PEO pricing. The simplest answer is your PEO costs cover a couple of different items:

    • Administrative fees
    • Setup costs
    • Pass-through costs or additional fees associated with different HR functions

    It’s important to note that PEO costs only apply to what you pay the PEO for services rendered and not business costs like payroll taxes and health insurance premiums. For example, you would still owe payroll and workers’ compensation taxes even if you did not partner with a PEO. However, a PEO can work with you to manage these functions and potentially save you money through means like master health plans and self-insured workers’ compensation.

    Administrative fees

    A PEO’s administrative fees are a set rate that accounts for all the ongoing work involved with managing a company’s account. These costs cover tasks that vary from handling payroll and payroll tax deposits to managing and paying workers’ compensation premiums. It also covers any time spent assisting business owners with any HR problems and questions that inevitably arise over time.

    PEO pricing for administrative fees can vary greatly based on the company you work with and the services they provide. For example, a PEO that only offers basic payroll and workers’ compensation assistance will have lower rates than a PEO with a comprehensive suite of HR services. 

    Administrative fees are typically invoiced every pay period. The specifics on how much your company is billed for administrative fees depends on the pricing model. There are three main pricing models that PEOs use for administrative fees.

    • Percentage of payroll
    • Per employee
    • Per check

    Percentage of payroll

    This pricing model bases administration fees around a flat percentage of your overall payroll. The percentage charged is based on multiple factors such as your total number of employees and payroll. The exact percentage depends on the PEO, but a typical range falls between two and six percent. However, business with seasonal employees may see percentages higher as a result of all the part-time workers.

    One advantage of the percentage model is that it helps business owners understand what they’re paying each pay period in administration fees – simply identify total payroll for the period and apply your flat percentage. However, this percentage can pose problems on occasions when your payroll is notably higher than usual, such as bonus payout periods. Depending on the PEO, you may be able to make special arrangements to adjust for bonus runs and avoid extra administration fees.

    Per employee

    Another pricing model is to charge an administrative fee for each of your company’s employees. This method means that a PEO’s fees aren’t tied to total employee compensation, which can be an attractive option. 

    The exact per employee rate can depend on the PEO in question. A more basic PEO may have rates as low as $10 per employee per week, whereas companies with more comprehensive offerings and customer service may be four times that amount.

    Per check

    The final pricing model is to pay administration fees per check. The PEO can calculate the number of payrolls and identify a flat fee to charge for every paycheck you hand out each pay period. The per check model is similar to the per employee approach in that it doesn’t tie your fee rates to your overall payroll.

    Per check fees can become complicated if your business has a large number of part-time employees who split up a certain number of hours. For example, if one person works a different day each week, you’ll need to cut checks out to each individual. This scenario will drive up your fees as opposed to one person working the same amount of hours. As such, the per check pricing model is better suited for businesses with more full-time employees.

    One-time and annual setup fees

    All PEOs will have some form of initial setup fee when you start your partnership. These one-time setup fees are designed to cover all the frontloaded services done to get your company up and running with a PEO. These tasks include a wide variety of setup project, some of which include:

    • Onboarding employees
    • Gathering necessary documents and information
    • Establishing payroll and direct deposit
    • Setting up withholdings for payroll, benefits, 401(k), etc.

    As you may expect, these initial setup fees vary depending on your PEO of choice. Typically, you’ll find that the majority of these fees range from $50 to $200 per employee. Certain services may also require additional setup fees or annual costs. For example, companies that use a PEO to manage 401(k) plans would owe a small setup fee for the plan, along with an annual service charge.

    Additional services

    While administrative and setup fees make up the vast majority of PEO costs, some PEOs also offer a variety of additional services available when needed. The exact services depend on what the PEO had to offer, which can include:

    • Background checks
    • Drug and alcohol testing
    • Drug-free safety plans
    • Flu shots
    • Employee assistance programs
    • Training programs (First aid, CPR, supervisor/leadership)
    • Recruitment/ad placement
    • Translation services

    Each of these services will typically call for some type of pass-through cost when you need them. The pricing models vary greatly based on the service. For example, a background check may cost around $10 to $40 for each check. Other services may charge a flat rate based on the number of employees participating. Your PEO should be able to provide clear pricing for these additional service in advance.

    Bundled vs. Unbundled PEO Billing

    Pricing models and setup fees are only part of the billing puzzle. It’s also important to factor in how your PEO presents your bill every pay period. There are two main ways that PEOs invoice companies:

    • Bundled bills
    • Unbundled bills

    Some PEOs opt to bundle all their rates and other HR costs into a single line item. This process makes it difficult to parse out exactly how much you’re paying for each cost, including your PEO fees. While you can subtract all of your HR costs – social security, Medicare, workers’ compensation, etc. – it takes time and knowledge of established tax rate to break down your exact PEO costs.

    Unbundled billing simplifies this process. This method breaks out each cost as an individual line item, allowing you to clearly see what you’re being charged for everything on your invoice. As such, unbundled billing means you can always identify how much a PEO charges for administrative fees without an extensive amount of math.

    Find the Right PEO for Your Business

    Comparing quotes is an important part of evaluating PEOs, but costs are just one part of the puzzle. It’s important to find a PEO that not only offers the services you need, but also the best, most cost-effective approach to making your business simpler, safer, and stronger.

    All PEOs are not created equal. At Group Management Services, we strive to take the administrative burden off your shoulders and work with you to find the right solution for your HR needs. Contact GMS today to talk to one of our experts about how we can save you time and money through expert HR management.