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How to Choose the Right PEO for Your Business – A Detailed Guide

Written by Stephanie Fortune

Hi, My name is Stephanie! I am passionate about helping small and medium-sized businesses empower themselves and their employees while working to achieve their strategic goals! By reviewing your unique business needs, we implement Payroll, Insurance, and HR solutions that are right for you!

December 6, 2022

Is your payroll system too complex and taking up a lot of your company’s resources and time? Are you considering outsourcing this work to a PEO? 

Know that a Professional Employer Organization or PEO can be a good option to outsource human resource administrative work. It not only saves time and money but also ensures to complete every employment life cycle. Moreover, it looks after every HR-compliance and avoids legal costs. 

However, if you don’t know what factors to consider for choosing the right PEO, here’s a detailed guide!

What Are the Steps to Choose the Right PEO?

A PEO must offer the right combination of add-on services, ranges of services and benefits to suit a business. If your company’s culture does not match the culture of the outsourced organization, it can cause trouble for both your company and your employees. So, here are some factors that can help choose.

Step 1: Ask for References

A PEO, confident of its services, will have no problem sharing its customers’ references. So, ask for the contact details of at least three of its existing clients. If the PEO hesitates in giving these details, it is a red flag to join hands with the service provider. 

Here are some questions you can ask its client:

  1. How long do you plan to take this PEO service and why?
  2. What organizational weaknesses could you find over the course?
  3. What made you stick to this PEO?
  4. How has this organization helped you?
  5. How many PEOs did you review before finalizing this one?

Step 2: Check Its Accreditation and License

Given that you will be placing your trust on a third company with sensitive employee data, your first line of due diligence should be to check the accreditation and license of the concerned PEO. Not to mention it needs to be a highly regulated company that will be responsible for filing your company’s tax forms and complex documents. So, it is best to run an evaluation concerning the following:

  • An auditor, in practice, should review and approve the PEO’s finances.
  • It should be a member of the National Association of Professional Employer Organizations (NAPEO)

Step 3: Go Through the Online Presence of the PEO

Go through the official site, its Twitter Page and the social media handles of the concerned PEO. Under it, you will find information about the company’s name, the salesperson you will interact with and the CEO. The purpose here is not to dig dirt but to analyze how the organization deals with customer complaints. 

Step 4: Ask About Compliance Support

One of the essential services a PEO can provide is compliance support. With new mandates coming up every little while, compliance rules keep changing. Moreover, if a company fails to meet it, the consequences will be both costly and time-consuming.

However, when a PEO has all this compliance knowledge and ability to support the system, it becomes easy to handle regulations, monitor changes and meet deadlines. 

Step 5: Access Financial Security and Strengths of the PEO

If the PEO you choose is a publicly-traded company, it would not be difficult to find its audited financial statement online. You can view it on the site and verify it using the investment research website. However, if the organization is privately owned, you can ask for the latest audited copy of its financial statement. 

Partnering with a professional employer organization helps to manage your payroll, worker’s compensation, recruitment and regulation. So, make sure to find the right PEO for your business. It may take some effort, but following these aforementioned steps will help in the searching process. However, you can also contact us for these services. Also, explore our blog section if you are interested in knowing more about such topics.

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