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  • It can be hard to manage HR functions internally. That’s why a Professional Employer Organization (PEO) provides comprehensive services for businesses in need of help. 

    However, some people aren’t as familiar with how PEOs operate and may be concerned about working with them. Fortunately, we’re here to help answer your questions. We’ve debunked three myths about PEOs that you shouldn’t worry about.

    Image of a man with a magnifying glass. Learn about how a professional employer organization helps businesses.

    PEOs Don’t Take Control of Your Business

    Myth: A PEO will take over your company.

    Nobody wants to lose control. Unlike what some people may think, hiring a PEO won’t lead to a takeover. PEOs partner with companies to help them make more informed business decisions and save them time and money. Our experts help you manage HR functions and stay compliant with any necessary laws, but you always stay in control and run your business.

    Small Businesses Can Benefit from PEOs, Too

    Myth: PEOs can’t help small businesses.

    You don’t need to run a huge company to benefit from a PEO. Small companies encounter headaches with HR functions just like any company. Figuring out payroll or handling HR for any number of people can lead to late hours and costly inefficiencies and errors. A PEO can help a small business solve these problems and save money while doing it.

    PEOs are a Smart Investment

    Myth: PEOs are too expensive.

    PEOs typically charge a fee per employee per month, but the costs of hiring a PEO are often covered by savings on your HR functions. Not only can PEOs uncover costly issues, they also put measures in place to make sure the “inevitable HR issues” don’t happen. Plus, you don’t have to spend countless hours trying to manage HR functions. PEO experts can manage that part of your business so that you can spend your time focusing on other important areas. 

    Complete Guide to PEOs

    Work with a Professional Employer Organization

    Over the years, GMS has helped over a thousand clients manage their HR functions. Contact GMS today to talk to one of our experts about how a PEO can help your company improve its HR functions.

  • You’re likely familiar with the saying, “If it ain’t broke, don’t fix it.” While this mindset can be beneficial in some areas of your business, it doesn’t quite fit when it comes to HR processes and policies. The landscape of federal, state, and local regulations is constantly evolving. Sticking to your status quo, even if it once met legislative requirements, could leave you non-compliant and expose your business to potential risks.

    In addition, technology advances quickly, and the systems that once seemed to streamline your operations might now hinder your efficiency or create unnecessary headaches for you and your team. This is where professional employer organizations (PEOs) can be of use. PEOs offer several advantages, particularly to small and medium-sized enterprises (SMEs) who may need more comprehensive in-house HR, payroll, compliance, and employee benefits management resources.

    While the temptation to stick with what’s familiar is understandable, embracing change, especially in HR, can significantly elevate your business’s efficiency and compliance. Partnering with a PEO can transform your HR department from a purely administrative function to a strategic asset. By offloading the administrative burdens that come with HR, you and your team can refocus on core business strategies and growth initiatives.

    The Benefits Of Partnering With A PEO

    PEOs can often provide services at a lower cost than if you were to handle these functions in-house. By pooling together employees from multiple companies, PEOs achieve economies of scale, allowing them to negotiate better rates for health insurance, workers’ compensation, and other benefits for your team. Often, these benefits are on par with Fortune 500-level companies and can assist with your recruitment and retention efforts. In addition, partnering with a PEO can help:

    • Ensure compliance: PEOs employ professionals with expertise in HR, benefits, payroll, tax compliance, and risk management. Partnering with a PEO gives you access to these experts, who can be invaluable for making informed decisions about your workforce and business strategy, all while ensuring your compliance with federal and local regulations.
    • Offer HR management and support: PEOs provide comprehensive HR services, including recruitment, onboarding, performance management, and employee termination. This support can relieve your internal team of these duties, allowing them to focus on other areas of your business.
    • Boost employee performance and satisfaction: Employees often experience better HR support with PEOs as they can offer more timely resolution of issues and access to a broader range of benefits. This can lead to increased employee satisfaction and productivity.
    • Provide flexibility for growth: As your business grows, a PEO can quickly scale its services to accommodate new employees, enter new markets, or adjust to changes in your business model. This flexibility is particularly beneficial for rapidly growing companies that need to focus on scaling operations without being bogged down by administrative tasks.

    According to the National Associations of Professional Employer Organizations (NAPEO), businesses in a PEO arrangement grow 7-9 percent faster, have 10-14 percent lower turnover, and are 50 percent less likely to go out of business. While the temptation to “stay with what’s familiar” may be strong, today’s business landscape demands agility and a proactive approach to HR management.

    By partnering with a PEO, you not only safeguard your business against compliance risks but also position it to thrive in an ever-changing market. This strategic move can be the difference between merely surviving and truly flourishing in your industry.

    Partnering With A PEO

    While partnering with a PEO might sound like a good decision, you might still be concerned about what that partnership actually means. When you start working with a PEO, you enter a co-employment agreement; this essentially allows the PEO to handle your payroll and benefits. However, you remain in complete control of your business, managing the day-to-day and making all the critical decisions related to your company.

    While PEOs speed up and streamline the hiring process by finding qualified candidates for you to meet, at the end of the day, you choose who joins your team. Your relationship with a PEO is designed to be collaborative. The co-employment model used by PEOs does not diminish your authority or ability to manage your team. Instead, it provides a support structure, enhancing your capabilities to focus on other business areas.

    Embrace Change With GMS

    Getting started with a PEO can feel daunting, but GMS makes it easy. Today, business owners need to be compliant with a multitude of regulations in regard to:

    Whether you’re seeking support in one specific area or need comprehensive assistance across all these critical functions, GMS stands ready to elevate your business. Our team of experts is dedicated to making your operations smoother, ensuring your workplace is safer, and fortifying your company against the challenges of tomorrow. Don’t let the complexity of HR and compliance slow you down.

    Contact us today to discover how we can transform your business into a simpler, safer, and stronger entity. Let us take the burden off your shoulders so you can focus on what you do best—growing your business.

  • Creating a startup venture is no easy task. Startups come in all shapes, sizes, and industries. Neil Blumenthal, cofounder and co-CEO of Warby Parker summarizes it best, saying, “A startup is a company working to solve a problem where the solution is not obvious and success is not guaranteed.”

    According to Small Business Trends, almost half of small businesses don’t make it past the fourth year. These companies still aren’t in the clear, as Forbes estimates that the overall failure rate for startups falls between 80 and 90 percent.

    Image of a startup company in need of help from a Professional Employer Organization.

    Why Startups Fail

    There is a myriad of reasons as to why these companies fail. Whether it’s due to putting out a product too early, not having enough capital, or simply being unable to keep up with the status quo, the statistics show that the odds are against these entrepreneurs. One of the often overlooked aspects of running a startup business is the human resources function, which can present many challenges, such as hiring and retention, employee training, safety, payroll, and benefits.

    How Startups Can Succeed

    There are many factors that contribute to the success of a startup. In his TED Talk, Bill Gross, founder of startup studio Idea Lab, attributes it largely to timing. Whether the world isn’t ready for it, the timing is just right, or you’re too late to the game, Gross says, “Timing accounted for 42 percent of the difference between success and failure.” Additionally, solid finances and great execution (which could be anything from product marketing to internal processes) can contribute to a businesses’ success and longevity.

    A Professional Employer Organization (PEO) can help startups develop critical hiring and retention practices, offload the burden of administrative tasks like payroll, and offer benefits in a cost-effective manner. The National Association of Professional Employer Organizations (NAPEO) found that businesses working with a PEO:

    • Grow 7 to 9 percent faster.
    • Are 50 percent less likely to go out of business.

    PEOs provide a number of services to help manage payroll, taxes, human resources, employee benefits, and more. Here’s how startups can benefit by working with a PEO:

    Recruitment

    As your startup grows, it can be hard to find the right people. According to CareerBuilder, the average cost of a bad hire can be as high as $15,000. Bad hires are typically made from rushing the interview process, lacking adequate talent acquisition tools, and failing to conduct background checks. 

    A PEO can offer guidance and resources for hiring, from creating and posting job ads to reviewing resumes. PEOs can do all the legwork to streamline the recruiting process and attract quality candidates.

    Retention

    Working for a startup can often mean long hours, which can lead to increased burnout and turnover. Especially when benefits packages are lacking or paychecks aren’t delivered on time, good employees may look elsewhere for better work/life balance, benefits, or job security. The aforementioned CareerBuilder survey found that the average cost of losing a quality employee is nearly $30,000. 

    Providing attractive benefits, building rewards programs, and implementing employee feedback tools are just a couple ways PEOs can help startups retain top talent. In fact, NAPEO found that those that do work with a PEO, experience a 10 to 14 percent lower employee turnover.

    Standards

    It’s often challenging for business owners to develop HR policies from scratch. In the early stages, many startups will even employ a “too small to matter” mindset, believing they can handle issues as they arise. The problem, though, is that when problems do—and they will—arise, employees and managers have no place to turn when they need a standard for business conduct.

    A PEO can help startups create employee handbooks and set employee expectations. Having good policies in place can help establish a positive company culture where employees understand expectations and feel comfortable addressing any problems they may be facing. In fact, a study by the University of Warwick found that happy employees are 12 percent more productive.

    Payroll

    For startups, managing payroll and filing taxes can be a time-consuming and challenging task. Between income types, deductions, contributions, and of course taxes, payroll can be tricky to comprehend.

    That’s where working with a PEO can provide value to both startup founders and their employees. PEOs can provide access to payroll software to streamline the payroll process, ensure payroll is delivered on time, simplify time tracking, and eliminate payroll mistakes. Payroll tax management also helps reduce tax liabilities and responsibilities.

    Compliance

    From misclassifying employees as contractors to offering workers shares in lieu of pay, it’s not uncommon for startups to violate federal regulations, even without intent. According to the IRS, 40 percent of small businesses incur an average of $845 in penalties each year.

    To minimize liability and keep up with extensive governmental regulations, a PEO can help startups stay compliant. PEOs offer assistance with payroll taxes by managing records, filing state and federal taxes, and issuing forms like 940, 941, W-2, and W-3s.

    Benefits

    Good employee benefits are essential to attracting and retaining top talent, yet the cost of providing benefits can be extremely costly to startup businesses. A survey by the Society for Human Resources Management (SHRM) found that 92 percent of employees find benefits important to their overall job satisfaction, with nearly a third citing employee benefits as a reason to stay or leave their current positions.

    A PEO can offer startups more cost-effective benefits packages by leveraging the power of group health coverage. Not to mention, PEOs can offer more comprehensive coverage, including supplemental insurance, retirement savings plans, wellness programs, and more.

    Work With a PEO

    Outsourcing your company’s HR responsibilities to a PEO like Group Management Services can save time and money, while allowing you to focus on growing your business. After all, you likely didn’t venture out to become an HR expert.

    GMS offers payroll, human resources, employee benefits, and risk management services to help your startup succeed. With our proven history, easy-to-use online payroll portal, and dedicated team of experts, GMS is proud to take on your administrative burdens. When you work with us, you can put your focus back on client relationships, building an effective team, and growing your profits, while we help you reduce costs, limit risk, and save time and money.

    Ready to work with a best-in class PEO? Contact GMS today to talk with one of our experts to see how we can make your startup business simpler, safer, and stronger.

  • For an industry that serves over 2.5 million people, Professional Employer Organizations can still be a bit of a mystery for the average business owner. The industry has helped businesses manage important HR functions for decades, but one of the most common questions owners ask is “Why have I never heard of PEOs before?”

    There are a few reasons for this, starting with the fact that there’s no simple, one-sentence explanation for what PEOs do.

    It’s a Pretty Complex Industry

    So exactly what is a PEO? A PEO doesn’t provide a tangible product. Instead, it offers an array of services and solutions. The National Association of Professional Employer Organizations states that PEOs “provide comprehensive HR solutions for small businesses.” In terms of an explanation, it’s a nice start, but it doesn’t go into nearly enough detail to truly describe how a PEO can help businesses and their owners.

    Business owners recognize the various important human resource functions they need for their business, such as payroll processing, employee benefits, legal compliance, risk management, and more. A PEO is designed to manage all of these critical HR functions.

    Of course, every business is different. This means that these HR solutions can change depending on each company’s specific needs. Combine that with the differences between compliance laws and other human resource distinctions and it can take a while to describe specifically what a PEO can do to improve your business.

    You Don’t See PEOs in Ads

    If a quick chat isn’t enough to explain the complexities of the PEO industry, that means that the traditional forms of advertisements are out. Unlike fast food chains, local furniture stores, and other businesses, you’ll rarely see or hear an advertisement for a PEO on TV or the radio because a 30-second spot won’t be able to really explain what the industry is all about.

    PEOs Don’t Always Call You Directly

    Another reason you may not have heard about PEOs is that not a lot of businesses in the PEO industry have the sales force to contact business owners by phone. At Group Management Services, we have the team in place to contact business owners and help educate them about PEOs, but not all of the roughly 1,000 PEOs in the country have the capacity to reach out to prospective businesses.

    PEOs Have Grown Dramatically in Recent Years

    While the PEO industry dates back to Marvin R. Selter and the late 1960s, the PEO industry has experienced a surge over the past five years that has helped introduce PEOs to more business owners. I joined GMS six-and-a-half years ago, when the PEO industry was worth around $85 billion. Today, it’s up to around $168 billion. 

    What helped drive the industry to nearly roughly double in size? Four words: “Increased laws and regulation.” 

    Over the past five years, a combination of the Affordable Care Act and increased regulations from the Department of Labor (DoL) and the Occupational Safety and Health Administration (OSHA) have added to what owners need to do to keep their businesses compliant. This development has led to more employers turning to PEOs to manage their HR functions to keep up with these regulations.

    Learn More About PEOs

    Now that you have an introduction into why you may not have known about PEOs, it’s time to learn more about the industry and how a PEO can help your business. Check out our PEO Education Center for additional resources on PEOs and HR management and contact us today to talk to one of our experts about exactly what kind of role a PEO can play for your company.

  • Managing the operations of a small business is costly and requires time away from more valuable projects. That’s why many small and mid-size businesses outsource human resources, payroll, employee benefits, and risk management services. A PEO (Professional Employer Organization) can help take these responsibilities off the plate of business owners, so they can focus on the growth and success of their business.

    We’ve put together a guide to understand what PEO services entail and how to choose the right PEO for your business.

     PEO services help small and mid-size businesses with employee management.

    What is a PEO?

    A PEO provides comprehensive business solutions and services. Through the co-employment model, PEOs work with small and mid-size businesses to:

    • Manage payroll and tax administration
    • Manage human resources and risk management functions
    • Provide employee benefits
    • Stay compliant

    By providing these services, PEOs help make the companies they serve a better place to work and conduct business. This typically translates into faster growth, higher retention rates, and increased success for businesses. The National Association of Professional Employer Organizations (NAPEO) found that businesses working with a PEO:

    • Grow 7 to 9 percent faster
    • Have 10 to 14 percent lower employee turnover
    • Are 50 percent less likely to go out of business

    PEOs help businesses grow by allowing them to spend more time improving productivity and profitability while focusing on their core mission. Additionally, employees benefit by gaining access to big-business employee benefits such as 401(k) plans, wellness programs, and health, dental, life and other insurance offerings. All of this contributes to the success of a company.

     

    How to Choose a PEO

    There are more than 900 PEOs in the U.S., according to NAPEO. With so many options, it can be hard to know which one to choose. Follow these tips to help you to choose the right PEO for your business.

     

    Assess Your Business Needs

    Before talking to a PEO, you should take stock of your business needs. What current challenges does your business face? Do you anticipate any changes to your company that could impact the services you need? Look at facets of your business, such as:

    • Payroll: Between managing payroll and filing taxes, small and mid-sized companies spend an average of $2,000 per employee each year to handle payroll and many incur IRS penalties each year due to compliance issues. Outsourcing payroll services to a PEO can save you time and money by providing you with a simplified, online payroll system.
    • Human Resources: From recruiting and retaining employees to tracking vacation time, managing your company’s HR responsibilities takes a lot of time. Outsourcing these HR functions to a PEO can help you save time and money, while growing your business.
    • Risk Management: Managing your company’s risk on your own can be time-consuming and costly. Instead, you can build toward a more secure future by outsourcing to experts at a PEO. PEOs can help you qualify for workers’ compensation discounts, keep unemployment tax rates down, and create a safer environment for your employees.

    Identifying your needs within each of these categories will help you better determine how your business will use a PEO and set the stage for choosing a qualified partner.

     

    Build Your Benefits Package

    Employee benefits will make your business a great place to work and help retain talent. While you’ll be hard pressed to find a PEO that doesn’t offer access to health insurance, the providers they work with and the amount of coverage their plans provide will vary. In addition to assessing your business needs, you’ll need a good sense of what types of health coverage your current and future employees will require and what you’re willing to spend on it.

    When you work with a PEO, instead of directly with insurance companies, you’ll be able to leverage buying power through mass policies, which lets you take advantage of purchasing multiple policies at typically lower premiums. 

    Speaking of multiple policies, you’ll also want to consider other benefits like dental, vision, and life insurance as well as 401(k) retirement savings programs to make your business more attractive to quality candidates. Additionally, wellness programs can help manage your premiums, while keeping your business running like a well-oiled machine. Whichever benefits are most appealing for your business, you’ll want to do your research to make sure you find a PEO that has everything you require.

     

    Perform a PEO background check

    When vetting PEOs, it’s important to look at their history, experience, and qualifications. Ask questions, such as: 

    • How many companies do they partner with? 
    • Do they have experience working in your industry? 
    • How many employees do they represent? 
    • What is their client retention rate? 

    And don’t forget to look at reviews from places like Google and Facebook. These are all telling signs of whether a PEO will be able to properly handle your business needs.

    Additionally, accreditations from organizations like the Better Business Bureau (BBB) and certifications, such as the Certification Program for Professional Employer Organizations (CPEOs) from the IRS, help demonstrate trustworthiness and reliability in a PEO. CPEO certification affects the employment tax liabilities of both the CPEO and its customers. To become and remain certified under the CPEO program, CPEOs must meet tax status, background, experience, business location, financial reporting, bonding, and other requirements. With only 37 CPEOs in the country, small businesses know they are working with a trusted partner.

     

    Evaluate a PEO’s Technology

    The purpose of PEO is to make your life easier. If the technology platform that a PEO offers isn’t simple to use, then the PEO is going to be more of a burden than an asset to your company. Web-based payroll portals benefit employers by compiling everything they need to manage their back office in one place. They also help employees get paid on time, track time, and access W-2’s and paystubs. 

    Your PEO’s online payroll system should help employers:

    • Manage and access payroll information
    • Complete payroll in minutes, not hours
    • Easily keep track of deductions
    • Simplify workers’ compensation calculations and payments
    • Generate on-demand payroll reports

    These payroll functions streamline the process for employers and keep employees satisfied. 

    Beyond payroll, any other administrative functions a PEO can digitize is only to your advantage. Your PEO should offer online data collection services for:

    • Employee reviews
    • Timekeeping and PTO requests
    • Health insurance and employee benefits
    • Company communication
    • Employee handbooks

    Being able to store these types of files in an online portal makes it easier for you to access, edit, and track.

     

    Focus on Your Business

    The point of working with a PEO is to ease your workload. A PEO that you have to manage is only going to add to your stress and laundry list of tasks and responsibilities. Knowing your PEO is taking care of your more administrative needs while you focus on the core of your business is comforting to business owners.

    Your PEO should provide you with designated HR, payroll, and benefits specialists to meet all of your needs. Additionally, your PEO should have a comprehensive risk management team, from  safety specialists that keep your workplace and employees safe, to unemployment and workers’ compensation experts to investigate and help process claims.

    By having a PEO handle the HR, payroll, benefits, and risk management side of your business, you’ll be able to focus on what really matters: building your business. 

     

    Work With a PEO

    When you work with a PEO, you need to make sure all your needs will be met. Group Management Services offers payroll, human resources, employee benefits, and risk management services to help your business succeed. With our proven history, easy-to-use online payroll portal, and dedicated team of experts, GMS is proud to take on your administrative burdens. When you work with us, you can put your focus back on client relationships, building an effective team, and growing your profits, while we help you reduce costs, limit risk, and save time and money.

    Ready to work with a best-in class PEO? Contact GMS today to talk with one of our experts to see how we can make your business simpler, safer, and stronger.

  • Running a business is no easy task. Not only do you have to focus on how to build your business, you also have to manage all the administrative efforts it takes to handle payroll, benefits, and other complex business functions. 

    Fortunately, there are ways for business owners to ease these administrative burdens. Human resources outsourcing organizations like Professional Employer Organizations (PEO) and Administrative Services Organizations (ASO) can help owners manage these crucial tasks. Of course, both types of organizations have key differences that can impact which option is best for you and your business. Let’s break down the differences between a PEO and ASO.

    A small business owner deciding between a PEO and an ASO. 

    PEO vs. ASO

    Both PEOs and ASOs are HR outsourcing organizations that can help business owners focus on money-making tasks instead of spending their time on administrative activities. However, PEOs and ASOs differ greatly in terms of service offerings and the way they approach HR management.

    What is a PEO?

    A Professional Employer Organization (PEO) partners with employers to provide a wide range of HR outsourcing services. Business owners can utilize PEOs for a full suite of services like payroll, tax administration, HR, benefits, and risk management or opt to use them for individual services like payroll.

    One of the unique aspects of working with a PEO is the co-employment relationship between your business, your PEO, and your employees. In this relationship, the PEO serves as the “employer of record.” You maintain full control of your employees, but the PEO can take care of managing your administrative functions and keep your business up-to-date with and new regulations and other concerns. 

    This arrangement is also beneficial for tax and insurance purposes. Not only does the PEO assume some of your compliance risks, you can also take advantage of the features like the PEO’s unemployment rates and claims, master plans for group health insurance, and other perks you can’t receive without co-employment. The PEO can also gives you access to tools and experts who can make it easier for you and your employees to access key payroll, benefits, and other HR information. 

    What is an ASO?

    As with PEOs, ASOs can offer a range of HR services for businesses in need of administrative assistance, although they typically don’t handle benefits coverage or workers’ compensation as often as PEOs. 

    ASOs also don’t engage in co-employment. This means the business is still the employer of record. This arrangement means that the business is liable for their own payroll taxes, claims, and state unemployment rates. For example, the ASO may file taxes, but they do so under your company tax ID instead of taking on that liability.

    Find the Right HR Outsourcing Company for Your Business

    When you need to ease your HR burdens, it’s important to determine an option that’s most suited for your needs. If you have existing HR staff and need an extension of your internal department to handle administrative tasks, an ASO may make sense. If you want a company that can partner with you to assume some of the administrative risks while managing key HR functions, a PEO is the best option. 

    It’s also important to find which exact company is right for your needs. You’ll want to vet each potential PEO of ASO about their services, customer support, and what you specifically need to protect and prepare your business.

    Ready to make your business simpler, safer, and stronger? Contact GMS today to talk to one of our experts to find out if a PEO is right for your needs.