Benefits of a PEO for Small Businesses and Startups


A professional employer organization (PEO) handles all the administrative services that are needed for companies to expand their presence. Most often utilized by startups and small businesses, PEOs specialize in HR, benefits, payroll, compliance, and automated services, allowing companies to recruit and retain the best talent without worrying about the additional costs and legal matters that are often involved. If you are considering hiring a PEO as well, here are some benefits this model could have for your business:


Considering the fact that PEOs are established organizations that operate using the latest technology and the best practices in mind, they could save you a significant amount of money simply by allowing you to avoid paying in-house personnel to manage human resources.

As many PEOs offer automation services that can handle calculations and distributions quickly and efficiently, working with such an organization can also lower your expenses of payroll processing and other accounting aspects. What’s more, PEOs will also give you the opportunity to decrease the often high costs of establishing entities, which can be particularly beneficial for any startup looking to expand internationally.

Time-saving benefits

Another great benefit of PEOs is the ability to delegate any tasks and activities that don’t generate revenue to trusted third parties. As long as you work with a reputable organization, a PEO will be able to handle those time-consuming yet still important tasks, such as creating payroll systems, administering benefit plans, task filing and reporting, and other similar activities.

This transference of tedious tasks will then allow you to save some valuable time, giving your staff the opportunity to focus on more important aspects of your small business like productivity, growth, and revenue. Clearly, working with a good PEO is a great way to get some extra hours throughout the day you can finally allocate to your core competencies.

Better recruitment options

As PEOs tend to offer their services in a number of different countries, they are able to provide far better benefits packages to employees than a small business ever could, including aspects such as health and life insurance. This appealing offer gives PEOs the opportunity to attract the best prospective employees for your specific needs.

Similarly, PEOs often have experienced recruitment professionals on hand that know how to locate and recruit the most talented employees for various industries, as well as working with a worldwide network of top talent. This access to talent allows you to add skilled, experienced, and adaptable workers to your team in a much quicker and more affordable manner compared to handling this process alone.

Compliance assurance

While being familiar with employment laws is essential for any business, these regulations can often change and are difficult to keep up with, especially if you plan on expanding your startup to different countries. The international nature of PEOs can be quite beneficial in this aspect as well.

Working with a reputable and experienced Global PEO allows your business to hire employees from anywhere in the world without the need to establish your own legal entity. Through extensive systems and smart solutions, such an organization will be able to handle the end-to-end employment processes and ensure your workers are fully compliant, giving you the opportunity to focus on growing your company.

Increased flexibility

One of the biggest advantages of PEOs is having the freedom to hire, terminate, and reassign workers depending on the current needs of your business. For instance, companies that were forced to downsize due to the socioeconomic uncertainty of the global pandemic were able to temporarily adjust their contracts with different working hours in an effort to retain instead of firing their workers.

Likewise, a PEO will offer your small business similar flexibility as well, allowing you to promptly hire new employees when demand and production rise, make reassignments and other quick changes due to evolving market needs, or even temporarily adjust salaries whenever production comes to a halt.

Quicker market entry

Partnering with a PEO will also give you the option to bypass the often challenging and time-consuming process of company incorporation that involves a number of foreign and complex bureaucracies. Instead, you could simply position employees on the ground in a timely manner, in an effort to take advantage of any new opportunities and beat your competition to the market.

Companies that work with PEOs can expand their business more quickly and easily, being able to increase production, develop new products, and improve customer service according to changing consumer needs. Without a PEO, setting up a legal entity is the only alternative, which is often too lengthy and expensive to allow you to take advantage of new opportunities.

Risk mitigation

Because you will be working with local experts, PEOs might also allow you to protect your business from potential risk. For instance, you could avoid making expensive mistakes such as payroll errors and consequent penalties and fines due to a lack of legal compliance, as PEOs are experts in these matters.

What’s more, the operational nature of PEOs also means these organizations will often take on all legal liability regarding the employer, meaning you could easily mitigate risk and have some peace of mind knowing you won’t be liable for potential issues that might arise in the future.

Evidently, PEOs are highly beneficial entities that could have a number of advantages for startups and small businesses alike. Whether your goal is to save time and money, find the best talent, or simply ensure legal compliance, working with a PEO can be a great solution for your company.

About the Author:

Keith Coppersmith is a business and marketing expert who has experienced both the rise and fall of many businesses. As a regular contributor at BizzmarkBlog, he enjoys writing and providing insight of the industry based on both practice and theory.

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