As your business grows, you’ll soon discover than that managing your employees becomes your main occupation, and further still you might find that without help you spend most of your time on things such as payroll and repetitive HR tasks instead of guiding your business and coaching employees. You have more important things to do, which is why we generally recommend the services of a PEO for business owners. They can get thing done, handle HR, and help you provide your hard-working employees with excellent benefits.
We’ll be talking about which companies to look at later on down the article, but first let’s talk about what a PEO can do for you and what else you might need to know about hiring one.
What Is a PEO?
PEO stands for professional employer organization, and it is an organization that enters a co-employment agreement with your business, taking on certain responsibilities. These responsibilities may vary from service provider to service profiver, but almost always include payroll (and related taxes) management, providing and managing benefits for employees, onboarding and offboarding employees, and providing compliance support so you don’t run into issues with labor law.
While you may think you can do all of these things in-house, unless you’re head of an extremely large organization the PEO will have more experience and wisdom handling these issues and will have the infrastructure to be more efficient about it. Additionally, a PEO typically pools its clients’ employees when bargaining for benefits, so you will have the cheapest offerings possible.
Benefits of Using a PEO
Using a PEO can be a notable expense, so you’ll have to decide if the transaction is worth it. To help you make the choice, here is a list of some of the most common benefits of working with a PEO.
Insurance Plans and Savings: Not only can a PEO generally save you and your employees money on health insurance, they can also provide a wider range of plans or better health insurance plans through their bargaining power.
Less Paperwork: Few people and fewer business owners like paperwork. Using a PEO, you will be able to delegate much of it to the PEO and automate the rest, at least when it comes to payroll and related issues. Other services offered may reduce it still.
Other Benefits: Health insurance isn’t to only benefit. Most PEOs also can provide retirement plan options and administration for employees. Discounts to some businesses and chains are available via the PEO are a common occurrence, as well as other benefits that vary based on the service provider.
Compliance Support: A PEO will be able to help your business comply with regional, state, industry, and federal regulations. For heavily regulated industries, this is a must.
Payroll Processing: The main day-to-day PEO function, any worthwhile PEO service provider will handle payroll with barely any input from you so long as the funds are available.
Recruiting: Many PEOs have services and specialists to help you recruit the top individuals to work for your company. From ads to tests to interviews, many PEOs can help.
Legal Support: PEOs usually have support or contacts available to help with compliance or HR related legal issues.
Training: Safety training is often a standard part of most PEO packages as part of risk-reduction and compliance support, but PEOs also often have additional training options depending on your business’ industry sector.
Different Types of PEO Companies Depending on Your Needs
No PEO company is universally the best, and one of the main factors you’ll need to take into account is the number of employees you have as well as your growth rate in terms of staff. Review the following information to make sure you make the right choice:
Less than 20 Employees
At this stage your business is still relatively small and you’ll need to account for payroll or staff minimums that many PEO service providers have. Avoid the obviously restrictive ones and focus instead on finding a PEO that will support your business as it grows. And even if it costs you a bit extra, try to avoid getting into a long term deal and instead look for flexibility from a PEO. You don’t want to be held down or stuck in an deal that won’t be good for your business when you have many more employees or need to downsize for a period of time.
Between 20-99 Employees
At this level you will want to look for a PEO service provider that can work best with a growing company and scale with you as you grow. You will also want to make sure you can get help with creating guidelines, safety documents and similar tasks, as at this stage it will become near-impossible to keep track of all employees yourself.
Additionally, make sure that the PEO you work with can handle tax concerns and keep you informed as to government and industry requirements, as at this level they will be more commonly applicable to your business.
Between 100-2000 Employees
At this stage you are no longer managing a small business, and you will need to focus your efforts on making large-scale decisions that matter and long-term planning for your business. You need a PEO that will support you regarding these efforts, so try to find one that will be able to get you more information, bother you as little as possible, and handle changes in your organization. Also make sure the PEO is skilled and large enough to property accommodate your organization.
After 2000 employees, we recommend you find a professional to help you work specifically on either creating an in-house system or to help you find the perfect PEO (and secure you a worthwhile deal).
What is the cost of using a PEO?
The cost will naturally vary depending on the size of your company, which PEO service provider you use, and the services you add to your plan, but generally you can expect to pay $1000-$2000 per year per employee.
In terms of employment, how does a PEO work?
The PEO will enter a co-employment relationship with your business. The PEO has your employee’s EIN, but you will still have complete managerial control and are still responsible for wages.
How does the PEO charge businesses?
It will either charge a flat fee per employee or charge a percentage of your total payroll. We prefer companies that use the flat fee model as they are usually more transparent.
Are PEO services available anywhere?
While not every PEO operates in every state, you will be able to find a PEO service provider in your state without issue.
How long does it take to set up a PEO?
Usually three to six weeks, although this timeframe may vary.
What requirements are there for using a PEO?
There usually aren’t too many requirements to use a PEO, but there are
How much does it cost to initially set up a PEO?
This can vary based on your business, but you can usually expect to pay anywhere from $1000 to $15000 for starting up.
Can I get health insurance benefits for myself and my family as the owner using a PEO?
The answer to this will depend on the PEO you work with.
Will I still be in control of the management of my employees?
Yes, you will still have full control over the management of your employees and your business.
Should I pay myself using the PEO?
The answer will depend on the structure of your business and the arrangement with the PEO, but in most cases you should pay yourself with the PEO.
Is using a PEO good for my company?
We think that PEO services can benefit every company with more than a few employees. There may certainly be some PEOs that wouldn’t be a good fit, but we’re confident that there’s a company that fits every business.
Who is responsible for payroll taxes, social security taxes, and other similar concerns?
The PEO is generally responsible for such tasks.
Who is responsible for compliance-related issues and obligations?
Usually a mix of the PEO service provider and your business.
What is the best PEO?
Only you will be able to determine that for yourself and for your business, but below we have compiled a list of the top 21 companies that you can look at first.
Factors of Evaluation for a PEO Company
Judging a PEO company can be difficult, and there’s a lot to balance. To provide more transparency on our part and to give you a better idea of what to look for, we would like to share with you our main criteria when reviewing a service provider:
- Attendance and productivity tracking tool availability and usefulness
- Customer service
- Tax and payroll management and related efficiency
- Safety compliance and risk management support
- Legal compliance support
- HR management and consulting support.
- HR regulation assistance regarding compliance
- Health insurance support, including the cost of plans, number of options, and related support
- Recruitment, onboarding, and offboarding processes
- Added features, specific industry support, and other special considerations and services
Not all factors are weighted equally, and some may be more important to you than others. There also might be special considerations or offerings not listed here that may catch your eye. As with most things, only you can make the final decision as to what is best for your business.
The 21 Best PEO Companies
We reviewed the market across the United States and have determined that these are the main competitors. Among these options we’re sure you’ll find a right match, no matter what industry you’re in or how large your business is. Please note again that not every choice will be a good fit, so make a shortlist and do some investigating once you’re done here.
Acadia HR – All across the country Acadia HR works mostly with small and medium-sized businesses to provide HR outsourcing services, payroll management support, and whatever other PEO services you might need. They have over 30 years of experience in the industry, and they want to save you time, help your business retain top performers, and provide comprehensive solutions to your business problems.
ADP Totalsource – One of the largest payroll service providers in the country and the world (if not the largest by many metrics), ADP is an excellent choice if you’re a large business that needs a lot of support or otherwise want a wide host of service options available to you. They can handle international business needs, and effectively can offer whatever services your business need, allowing for confidence and focus on your end.
Ahead Human Resources – An excellent choice for smaller and medium-sized businesses that want a more personal touch when it comes to service, Ahead Human Resources can offer you every standard service and also excels at staffing should your business have difficulties recruiting (or have a sudden need).
Alphastaff – Alphastaff is among the most flexible and customizable of the PEO service providers listed here and can be a great choice if you know exactly what you want from your future provider. They’re also excellent if you’re uncertain of where to go and want to keep options open to you.
BBSI – Only operating in a dozen states but working with thousands of clients, BBSI is growing rapidly, remains stable despite this, and has been in business for over 70 years. If they are available in your state, they are an excellent choice if you need management help or want a closer business-provider relationship with your PEO company.
CoAdvantage – Part of the Morgan Stanley Capital Partner Umbrella, CoAdvantage is one of the fastest growing PEO companies on this list and also one of the most driven. Working with them, you can expect constant positive change, an embrace of technology that isn’t always seen from PEO service providers, and team-building services that are better than the competition.
Engage PEO – While they are a great PEO service provider when it comes to most things, Engage PEO really shines when it comes to training options. If you need your employees to get better or learn to skills, Engage PEO has you covered. There is a ten-employee minimum, however, so you’ll need to keep that in mind before signing anything or inquiring further. One last thing of note is that they are one of the best when it comes to compliance issues.
Impact Workforce Solutions – Among the top five percent of PEO service providers in business, Impact Workforce Solutions focuses on reducing inefficiency, lowering turnover rates, and helping your small business focus on what it does best. They are great at increasing participation in benefit plans, and they stand out for taking the time to get to know your business and your workplace culture.
Insperity – Insperity first and foremost has excellent training materials and programs, and they have experience in the industry to the degree that they know what works and what doesn’t. Insperity is also one of the best choices if you want to keep better track of what your employees are up to, with their excellent time-tracking programs and a flexible service model.
Justworks – Justworks is a top choice if you hope to work with a great online platform, which the company has put a lot of effort into crafting. If you don’t need too many extra options and simply want to have an affordable provider, look more into them. They can service even the smallest businesses, and can still handle all necessary functions.
National PEO – National PEO can plenty of different options and features that businesses can take advantage of, and if your business needs onboarding help, they can brings things up to speed quickly. As a general rule they are loved by their clients for being able to perform things such as in-depth background screenings and for being very much on top of potential labor law compliance issues.
Oasis Outsourcing – Oasis Outsourcing does payroll processing well and if that’s mostly what you need, you’d be hard-pressed to find a better fit. Yet outside of their excellent main service, there’s more to them in that they are quite flexible in their plans, making them good for small businesses who might not be sure of what they need yet.
Paychex – Paychex is another PEO service provider that primarily focuses on doing payroll processing and doing it well. No matter the size of your business and no matter what services you want, you can expect quality care. More recently, they have added time-tracking tools and other features, and we can only expect things to continue to improve soon.
Questco – A great choice for smaller to medium-sized businesses, Questco can keep things affordable for your business while still providing all the services and support your organization needs to keep going. You’ll need to check to see if they operate in your state of operations, but if they do expect easy-to-use software and your selection of services, reducing waste of funds on things your business won’t benefit from.
Resourcing Edge – Resourcing Edge is among the smaller PEO service providers listed here and might not be big enough to support the largest companies reliably, but they are a flexible, adaptive service provider that can make sure you get not just the standard services but the support your business needs. Expect growth and changes along the way, and great training options should you need them.
Resource Management Inc. – Serving 48 states in the country, Resource Management Inc. is a fantastic choice if you’re looking for additional help getting staff or managing personnel. They naturally handle payroll and other standard tasks as well, and by our review would be best for small or medium-sized businesses.
Staff One – Serving 44 states and expanding rapidly compared to other PEO companies, Staff One might be most notable on this list for its ability to help international businesses as well as special options for dentists. They are transparent, easy to work with, and can give you a clear view of the future of your business.
Synergy – Founded in 1989, Synergy is ready, willing and able to provide you with the full scope of PEO services. They tackle problems head-on and prefer to take a hands-on approach to helping your business, often noticing things before even you might. They are on top of things when it comes to risk-management, and have excellent training options.
Total Team Solutions – Offering a rare pay-as-you-go workers compensation option, other unique opportunities, and excellent customer service, Total Team Solutions is a small but effective company that has partnerships prepared to make sure you get everything your business needs. Look more into them if you like the idea of unique services.
TriNet – With an excellent online platform and solid name recognition, TriNet is a great choice for larger businesses with remote employees across the country. With competitive benefits packages, they are also a strong choice for companies that seek to remain competitive in terms of keeping top talent. They also may offer industry-specific support, so take a further look if you need it.
Vensure – A great choice for businesses of any size, Vensure has thousands of clients working with them to ensure maximum payroll efficiency and strong benefits. What makes them more unique is that they tend to offer industry-specific solutions to businesses, making them a strong choice for organizations in heavily regulated fields.