6 Questions to ask a PEO

If done correctly, the co-employer relationship between a small business and a Professional Employer Organization (PEO) can be very successful. This relationship is between the client (employer), their employees, and the PEO. Employees gain access to high quality benefits at a lower cost. The client (employer) maintains the day to day control of decisions and operations of the business, and the PEO becomes the employer of record for tax and benefit purposes.

A Professional Employer Organization can serve as a valuable resource for small business owners. Engaging in business with a PEO gives small business owners access to a rich suite of benefits.

The PEO also provides a valuable wealth of human resource, payroll and benefits administration professionals. Professionals who are committed to helping the business succeed.

You probably would not go out and buy a new car without doing some research beforehand. People tend to dedicate time to doing ample research and scouting out options before investing a large chunk of money into a new product. So why would joining a PEO be any different? Take the time to thoroughly research your options before signing on the dotted line with a Professional Employer Organization.

Finding the best fit for you and your business is the top priority. We recommend keeping these six questions in mind when considering doing business with a PEO.

  1. How many years of experience does the PEO have in the field? If you are considering outsourcing the back office administrative tasks of your business to a PEO, make sure the PEO and their staff have the experience to help your business succeed. Before doing business with anyone, be sure to education yourself on their background in the field.
  2. What services can I expect to receive? A Professional Employer Organization is an outsourced solution for payroll, human resources, benefits and compliance. Be sure you understand exactly what all that means. Have a clear understanding of which responsibilities will remain with the business and which tasks will be taken over by the PEO. Setting expectations up front will help you and the PEO to avoid potential misunderstandings in the future.
  3. What employee benefits will be available? One of the most attractive aspects of a partnership with a PEO is the rich suite of benefits. In addition to gaining the ability to offer quality health insurance to your employees, employees are also able to choose from a package of additional benefits. These benefits may include the following.
    • Health, Dental & Vision InsuranceWellness Programs
    • Employee Assistance Programs
    • 401(k) Retirement Savings Plans
    • Short-Term and Long-Term Disability Insurance
    • Life Insurance
    • Health Savings Account
    • Flexible Spending Account
  4. How frequently should you expect communication? If you are going to hire a PEO to assist with the administrative tasks of your business, it is very important to know what to expect when it comes to communication. Think of the PEO as an extension of your back office. Be sure that you understand who you will be communicating with. Ask the PEO how they can be contacted – email, phone call, in-person, etc. Also ask about the frequency to expect these communications. If there is an emergency, you need to know who to contact and the best method to do so.
  5. What payroll processing software does the PEO use? The payroll processing system is the hub for all information related to payroll – a.k.a. how you and your employees get paid – and paid on time. Be sure to ask the PEO what software they use, the pros and cons of that software, and how long they have been using it. When in doubt, ask for referrals. Who better to ask than current clients of the PEO who are currently using the software?
  6. Will the PEO break down the associated fees? Does the proposal break down the fees for each specific service? Or does the proposal display a single number that bundles all the service fees together? If the PEO is not being clear and up front about what the fees are for, it may be best to rethink your choice. Transparency is key when selecting a PEO. Your business and the PEO will be working together closely. Find a PEO that is open and honest with you. Asking questions right away will help you understand if the PEO will be a good fit for you and your business.

The co-employment relationship helps hundreds of employers grow their business every year. Statistics show that business owners who use a PEO have seen:

  • 10 – 14% less turnover
  • 7 – 9% faster growth
  • 50% less likely to fail

Although the PEO model works very well for small business owners, it is not a “one size fits all.” That is why we do things a little differently at Focus OneSource. We value each of our clients and their uniqueness. We strive to create the perfect package for all our clients.

Like a traditional Professional Employer Organization model, Focus OneSource offers the full PEO package to small and mid-size business owners. For those who are wanting something different for their business, we offer an a la carte option. Our unique ability to break apart our services allows our clients to customize the perfect package for their business needs. Focus OneSource is the only locally based Iowa PEO. Based out of Des Moines, we can form a unique relationship with our customers – a relationship built on the principles of choice, trust, and transparency. Contact us today to learn about how Focus OneSource can completely customize a package perfect for specific business needs.

Alaina Riley
Marketing & Wellness Coordinator