Myth #1 - "I will lose control over my employees."
Today, this can't be further from the truth. The PEO client services agreement is executed between both you and the professional employer organization of your choice. The determination of the rights of you as the employer and the PEO as the co-employer are outlined for all to understand. If you find anything that does not appear correct, by all means, inquire about it. We also recommend a quick review by legal counsel. Losing control is a myth as PEO's today share the burden of employment, but you may hire, fire,
and give raises without the PEO getting involved.
Myth #2 - "A PEO is actually a payroll provider with medical benefits."
This concern has been voiced because the PEO and is relatively unknown in many of the 50 United States. Although small businesses in Florida, California and Texas are very familiar with the concept, the other 47 states are not so enlightened. Ultimately the PEO does take care of payroll, but the sharing of risk and burden of employment are well beyond the definition of a payroll provider.
Myth #3 - "A PEO will be confusing to my employees."
This myth, like most others, can be handled with proper communication. In fact, the PEO will even provide assistance in outlining the many benefits the employees will now have available to them. Additionally, employees will be thankful that they have someone other than yourself to answer typical employee benefits and other related questions. Now, can employees get confused? Yes, but with the proper planning, (not too much, mind you,) you can reassure employees that you are still the boss, now providing them with more than the typical small business benefits you had prior to the PEO relationship.
Myth #4 - "I still need to work with an insurance broker."
This is an interesting myth, one that we have heard a couple of times. While there are a number of brokers that provide assistance in selecting a PEO, there are many PEO brokers that do not resell medical or other insurance. Therefore, this one is entirely up to you. If you have a great relationship with your broker, by all means, continue working with them. However, the PEO is a one stop shop for many services, and can more than make up for a broker that is not responsive to your needs. Remember, PEO's are not insurance companies and do not sell insurance, but simply provide you with medical and other benefits under the 'employment umbrella' as if you were a much larger organization.
Myth #5 - "PEO's are expensive."
PEO's, as we stated above, are not payroll only providers, but provide a full level of employment related services. While the cost of these additional services are more than a payroll vendor, a simple review of the true costs of your time can be the difference in your decision. We believe there is a true ROI in working with a PEO, and have provided a few thoughts as you review a PEO for your needs. Examples of savings include:
- Retaining your best employees
- Saving time learning and understanding compliance issues
- Reducing administrative time on payroll and payroll tax compliance
- Less time (for you) finding medical and other benefits for employees
- Cost containment on the burden of medical costs
So, as we started out the professional employer organization disadvantages are really not disadvantages. We believe any small business with an employee base between 1 and 100 should consider a PEO as an option outside of the typical payroll outsource option. You are provided with more services, less work and a better way to retain your employees - which means an easier time for you in leveraging your business for growth.
About the Author
Anthony Kelly is a frequent contributor to PEOcompare.com and frequently writes about the advantages of using a PEO, rarely can he find any professional employer organization disadvantages. He can be reached at a.kelly@peocompare.com.
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