What is a PEO?
Managing human resources is time-consuming and highly specialized work which is why many small businesses turn to outsourcing. Outsourcing HR functions not only free up time and energy of existing staff and practice owners, but it also ensures that HR matters are handled appropriately, efficiently, and in accordance with best practices and the law.
A Professional Employer Organization (PEO), is a one-stop shop for the HR needs of small businesses. PEOs offer a suite of services from payroll and tax management, benefit claims and health insurance administration, to many HR functions.
Most small business owners didn’t get into business because they’re payroll wizards or because they love filing tax forms. Most people go into business because they have a specific set of skills to share and a passion for what they do. Sound familiar? Chances are if you’re a physician who owns (or is a partner in) a practice, you chose this career path so you could help patients, not so you could learn how to calculate payroll deductions.
“I chose JustWorks as our PEO because I loved the efficiency with which payroll and associated HR functions can be done. They saved our small company significant money on worker’s compensation, health care benefits and employer insurance. JustWorks allowed us to offer a much wider range of benefits to our employees including life insurance, short and long term disability, and various other perks.” – Susanne Madden, Founder & CEO, The Verden Group
When you outsource these tasks to a PEO, they essentially become the employer to your employees’ — you still run the business and your staff answer to you, but your PEO handles everything relating to payroll, taxes, and benefits. Some PEOs will also manage incentives, employee benefits, and perks such as access to 401(k) plans, discounts on public transportation and other commuter benefits, or bulk discounts for wellness perks such as meditation classes or gym memberships.
What does a PEO cost? Is it worth it?
Like all professional services, PEO fees can vary greatly. Most PEOs calculate fees based on the number of employees, your location, and business credit scores. Costs per employee can range from $99/month to upwards of $200 depending on which PEO you choose and what services you require. Other factors such as past Workers Compensation and benefits claims history may also contribute to the calculation of your fees. Before you hesitate at the thought of paying someone else to manage your employee services, consider both what it would cost to hire a trained professional in-house to do this and the cost savings that a PEO can offer you on health insurance plan fees and more.
What can a PEO do?
A PEO does a lot more than issue paychecks to your regular employees; they’ll handle payments to vendors, contractors, casual and temporary staff, as well as taking care of automated deposits, vacation payments, and expense reimbursements.
Benefits & Savings
PEOs offer access to competitive rates for medical, dental, and vision coverage for your team because they can typically apply the negotiating power of larger companies by grouping employees of many small businesses together. In addition to negotiating lower rates for your benefits plan, PEOs handle the administration of benefits-related paperwork and offer easy to use self-serve online tools making it easy for your staff to access and submit information and paperwork relating to their payroll and benefits.
A PEO will take the stress and guesswork out of your employer-related compliance needs. No more worrying about payroll taxes, employee tax forms, and reporting. Different PEOs offer different support, but you can expect most to handle new hires, Workers Compensation, W-2, and 1099 filings, as well as matters relating to UI and EPLI.
Decrease Risks, Increase Productivity
Has your practice ever been fined for making payroll errors? If it has, you’re not alone — 33% of small businesses get penalized every year for payroll mistakes. With over 15,000 often-changing tax codes, its no wonder costly mistakes are made. PEOs are compliance experts who know what paperwork needs to be filed and when.
The Value of Your Time
Running your medical practice takes up a lot of your time. Most practicing physicians, if not all, wish they had more time to spend on patient care rather than on the business. Signing on with a PEO can free up valuable time so you can focus on what matters most to you — your patients.