Common Misconceptions about the PEO Model

After being in the Professional Employer Organization (PEO) industry for over a decade, we have heard some pretty surprising misconceptions about the PEO model. PEOs operate around a model referred to as co-employment. This unique relationship between the PEO, the business owner and their employees is different from the more commonly known relationship between the employer and the employee. And we all know that different concepts tend to spark curiosity.

We have answered these questions one-on-one with prospects, friends, clients, and even family members for years. So, there is a good chance that people are still asking these questions today. Let’s set the facts straight and de-bunk some common misconceptions about Professional Employer Organizations.

“My business is too small for a PEO.”

We do not believe in ‘too small.’ In fact, we prefer growing businesses. Small, or growing businesses, tend to have the most impactful outcomes from working with PEOs. Many owners with growing businesses seek out PEOs because of the many benefits that the PEO has to offer – at attainable price points. A partnership with a PEO means access to a rich suite of benefits including, but not limited to:

  • Medical, Dental and Vision Insurance
  • 401(k) Retirement Savings Plans
  • Employee Wellness Programs
  • Employee Assistance Programs
  • Short-Term and Long-Term Disability
  • Life Insurance
  • Flexible Spending Accounts
  • Health Savings Accounts

In addition to the benefits, working with a PEO gives business owners their time back. Running a business requires time and dedication to the administrative tasks of the business. But, if the business owner is worrying about that, who is working on growing the business? PEOs take the bulk of the administrative tasks off the business owners’ shoulder. Allowing them to focus their time and efforts on growing the core business.  

“Working with a PEO means giving up control of my business.”

The main role of the PEO is to take care of the backroom administration – tasks that are necessary to run a business but handed over to experts who specialize in these specific areas. The business owner continues to run the day-to-day operations of the business, while the PEO works diligently in the background. The business owner continues to be the face of the business in the co-employment relationship. All while the PEO stays back and manages the benefits administration, payroll processing, human resource administration, and more. Think of the PEO as an extension of the back office.

Working with a PEO frees up more time for business owners to dedicate to growing their business. More time and energy can be dedicated to the functions of the business that generate the most revenue and grow the business.

“My employees won’t like the transition.”

Working with a successful PEO can actually enhance the employee experience. Business owners gain access to a rich suite of benefits that are traditionally out of reach for small businesses due to financial barriers. Providing employees access to high quality benefits helps foster a productive workplace. Nothing says ‘I care about your health and wellbeing’ like top of the line health insurance. The ability to offer and promote quality benefits gives growing businesses a competitive edge in the job market, which helps to attract and retain top talent.

“Working with a PEO means I can’t hire or fire my employees.”

The business owner maintains control over hiring and firing their employees. The PEO assists with the onboarding and offboarding of employees that are either hired or fired by the business owner. It is traditionally not the responsibility of the PEO to hire or fire any work site employees. Once the business owner chooses to hire a new employee, the employee then meets with the PEO for the onboarding and benefit consultation. Similarly, when the business owner chooses to let an employee go, the PEO assists with making sure the employee is properly offboarded and appropriate documents are taken care of.


Business owners do not have to wait until their renewal to switch health plans. Business owners looking to make a change with their health insurance plans can switch on a quarterly basis. For example, rather than waiting for your renewal date, you could change on January 1, April 1, October 1, etc.

Why You Should Consider a PEO for Your Growing Business

Running a business is a big responsibility. Although many business owners are fully capable of running their own business, the daily administrative tasks eat at valuable time that could be spent on growing the business and increasing profitability. There is more to running a business than meets the eye.

Professional Employer Organizations come in and remove the burden of the administrative tasks from the business owners’ plate. Freeing up valuable time that can be dedicated to the core functions of the business.

Focus OneSource and You

Focus OneSource is an Iowa domiciled PEO that has been in business in the Des Moines area for over a decade. In that time, we have helped numerous business owners succeed by helping them to increase their productivity and profitability. Being headquartered in Iowa gives us a unique perspective on the local growing businesses that we have the opportunity to work alongside.

Many business owners will find a PEO relationship to be very beneficial to the success of their business. However, there are scenarios when the PEO model may not be the best fit. We have worked with numerous growing businesses and understand the wide range of needs that are unique to each business. Because of this, we chose to break apart the PEO model into an a la carte option. This allows our valued customers to hand pick the components that will be the best solution for their business. The PEO model continues to be the core of our business, but we strive to work toward creating the best strategic business solutions for each unique business owner. A relationship with Focus OneSource provides a solution as unique as you and your business. Call us today at 515-369-7597 to learn about your customized business solution.

Alaina Riley | Marketing & Wellness Coordinator