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PEO stands for Professional Employer Organization. Formerly known
as staff leasing companies, these days PEOs are often referred to
as a co-employers.
A PEO is there to handle all the administrative burden of employing
your staff. Think of it as your offsite HR department. Its services
cover three key areas:
HR Admin and Support
Covers everything from the paperwork surrounding new hires and
terminations, maintaining employee files, advising on employment
law issues, dealing with compliance, to staff handbooks and training
& development.
Add to that high tech access to advice, employee records and information
through a web portal, so you can check any administrative query
at a glance without wading throug onsite records.
Payroll and Tax Filing
site
Goes well beyond a payroll service. They also manage all your state
and federal tax filing. Even better, they are legally responsible
to the IRS for filing, so if there's an error, it's down to the
PEO to deal with it. You never have to file with the IRS again.
This is especially helpful if you have out-of-state employees -
a couple of sales reps around the country can create a huge burden
in tax filing.
Benefits and Workers Compensation
A PEO uses its buying power to secure best rates - better than
a small company can manage on its own. It will also help you implement
a sound risk management program.
What it's not...
A PEO is not just a payroll service, although many payroll services
will do tax filing for you. It's not just a benefits or insurance
broker. And it's definitely not a temp firm or staffing agency -
a PEs will handle the new hire paperwork, but it doesn't keep a
database of candidates or do any proactive headhunting.
It's a combination of these three elements of HR administration,
payroll and benefits management which make up a PEO. It attends
to the administrative detail of employing which small businesses
don't have the time for, but which can cause severe headaches if
not managed effectively.
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