Running a business is difficult. It comes with complications that many first-time business owners may not foresee, such as dealing with complex tax law, adhering to convoluted regulations, putting workplace safety policies in place, and more. Even worse, the solution of hiring an in-house accountant and human resources staff can rack up serious bills.
PEOs (or professional employer organizations) are here to help. By partnering with a PEO from the nationwide network of NetPEO, companies can reduce the overhead cost of human resources while still controlling other expenses. Here are the main ways that a PEO can help your business control its costs.
PEOs Cost Less Than In-House HR and Accounting Staff
The first way that PEOs can help your business reduce needless expense is by performing the services of full-time, in-house HR and accounting departments for a fraction of the cost. Typically, the cost of hiring a PEO can be broken down into two options.
Payment as a Percentage of Overall Payroll
Some PEOs charge business owners as a percentage of a company’s overall payroll. This can be a good option for companies looking for more flexibility or companies that have a large number of workers on lower wages. The usual cost of a PEO is between 3% and 10% of payroll.
Payment as a Flat, Annual Fee Per Employee
For other businesses, the better option may be to pay a PEO a flat yearly fee per employee. This is often a better choice for businesses with an inflated payroll or businesses that want a more predictable expense for budgeting purposes. The usual cost of a PEO via this option is between $900 and $1,500 per employee each year.
Regardless of which option is chosen by the client company, the end result is that the business owner receives stellar HR services for much less than it would cost to hire a salaried HR or accounting staff.
Services That Help Control Costs
Simply being less expensive than in-house options may be enough to convince business owners of hiring a PEO, but there is much more they can offer. Several of the services PEOs provide are directly linked to controlling and reducing unwanted or unnecessary expenses.
Risk Management Consulting
Many PEOs employ experts in the human resources industry who know the ins and outs of managing risk. This is important because a company’s risk profile is directly related to their likelihood of having unwanted costs. Some of the ways that PEOs in our nationwide network can help employers include the following:
- Ensuring that your business is up to date with Workers’ Compensation regulations
- Developing safety protocols to reduce liability
- Keeping your business compliant with local and federal laws
- Creating harassment policies to reduce liability
Reduction of Employee Turnover
An even more frustrating expense for business owners is needless employee turnover. No sooner do you expend money, time, and energy bringing a new worker into the fold than they (or another employee) hand in their two-weeks’ notice. PEOs can help reduce costly turnover in several ways. In fact, a recent study found that overall employee turnover rates was reduced by 10% to 14% for businesses that teamed up with a PEO.
First, PEOs enter into co-employment agreements with the businesses they serve, giving them a much larger employee pool than any one client business. This means that they have better negotiating ability to provide top-tier employee benefits packages. It also means that the individual cost of these benefits is greatly reduced, since it can be spread out over a larger number of employees. Better benefits often lead to lower numbers of employees wanting to pursue employment elsewhere.
Secondly, PEOs can help employers in the recruitment process. Recruiting more rigorously can ensure that employees who do end up employed by your business are a better fit and last longer. PEOs also help by creating a more fruitful and effective onboarding process and can work to build a positive company culture that lends itself toward attracting long-serving employees.
Begin Controlling Costs With a PEO Now
At NetPEO, we help business owners from small-to-mid-sized companies in virtually every industry to find the right PEO for their needs. If you are a business owner trying to control costs that often seem difficult to understand, your best option may be to enter into a co-employment arrangement with a qualified PEO.
Get in touch with us today to choose from our nationwide network of PEOs with more than two centuries of HR and accounting experience. NetPEO has the highest client retention and client satisfaction rates in the industry, and we allow companies to outsource their entire HR department or to select individual services on an a la carte basis.
To start looking for the perfect PEO to suit your company’s needs, either call us today at (678) 376-1212 or fill out the form on our contact page. One of our representatives will be in touch with you soon to schedule your FREE initial consultation. Don’t spend more money than you need. Call today and start controlling your costs!