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What is a Professional Employer Organization (PEO)

If you’ve found yourself wondering what a PEO or Professional Employer Organization is, you are not alone. A Professional Employer Organization (PEO) company partners with small and mid-sized businesses to offer human resource management services.

PEOs or “Employee Leasing” companies, as some may know them, offer various services to their clients or co-employers. PEOs offer complete payroll processing, risk management support, benefits and human resource management resulting in a complete HR solution.

Under the PEO framework, the client company and the PEO form what is called a co-employer relationship. The National Association of Professional Employer Organizations (NAPEO) defines co-employment as the contractual allocation and sharing of employer responsibilities between a PEO and its client.

PEOs partner with SMBs to provide HR, Payroll, Workers' Compensation and benefits solutions.

What does a PEO do?


PEOs process your payroll and manage the entire operation. So consider your automated deposits, one time payments, vacation and time off accrual. They manage it all. Not to mention the tax reporting and management process.


PEOs assist in providing small and mid-sized businesses access to benefits options they would not otherwise have access to. Such as benefits administration, access to various plan designs, and the claims process.

They can also provide access to medical, dental and vision coverage. Some PEO’s or leasing companies even offer life and disability coverage and 401(k) plans to their client companies as well. 

Risk Management & Compliance:

A PEO takes the burden of securing workers’ compensation coverage and places its client companies under their workers compensation classification code. As a result the client company can potentially reduce the their workers comp rates and overall premium costs. In addition, the risk department of a PEO also gives you access to risk management experts that review your companies safety procedures and recommend and assist in implementing safety measures to create a safe work environment for the employees.

For many small and mid-sized businesses, securing workmen’s compensation is a challenge. Even using an insurance broker can come to no avail. Consequently, PEO’s have offered a solution to such problems in providing an alternative to finding workers compensation coverage.

Human Resource Management (HRM):

Human resource consultants are provided by PEO’s to give their client company the tools to help manage and support the employees. From training and development to new hire packages and on-boarding processes and procedures. A PEO provides all of the support the client company would need to help in successfully on-boarding, training, and if necessary off-boarding of employees and everything in between.

According to a recent study by noted economists Laurie Bassi and Dan McMurrer, businesses that use PEOs grow 7 to 9 percent faster, have 10 to 14 percent lower employee turnover, and are 50 percent less likely to go out of business -NAPEO

How do you know which PEO is right for you?

So how do you know if a Professional Employer Organization (PEO) if right for your business needs? If you have a small or mid-sized business and are great at running your business and providing services to your client but find it challenging to manage the HR aspects of things, you may want to consider a PEO.

Say you’re a small business and want to offer benefits to your employees but simply don’t have enough employees to participate. A PEO should be considered.

From processing payroll, to managing HR and workers compensation issues, time is of the essence. A Professional Employer Organization provides the expertise to help business owners free up their time to focus on what matters most, growing their business!

PEO Brokers assess the client companies needs and determine which PEOs would be suited to meet and exceed their needs at the best possible rates.

Consulting a PEO Broker can reduce the time spend and headache that may result from having to learn a new industry, which companies provide what, how they are all priced and the sometimes tedious submission process for each. 

Using a PEO Broker can take the headache and frustration out of the process and save you money and time as a result.

So, is a PEO the right fit for you?

Schedule your free risk and HR audit with a PEO Broker Today

Still have questions?

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Stephanie Fortune

Stephanie Fortune

President - Fortune Business Consulting

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 HR, Commercial insurance and payroll solutions that are right for you!

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