A professional employer organization or PEO works as an outsourcing partner for businesses, helping manage human resource functions. PEOs share employment liability, making it easier for organizations to offer employees better benefits. Acting as an extension of the business, a PEO engages with the management team and addresses complex employee-related matters. Some PEOs also manage platforms for handling employee data. Here are a few reasons why businesses may need PEOs:

1. Limited resources
This usually happens with small or new businesses. Such organizations may not have enough funds to build a full-fledged in-house HR department. While they get on their feet, a PEO can offer the organization necessary human resource support. They can assist with streamlining administrative tasks, legalities, employee handbook edits, updating company policy updates, and other tasks. For businesses that already have an HR team in place, a PEO can manage the basic HR activities so that the team can focus on strategic HR initiatives for business growth.

2. Excessive paperwork
While administrative paperwork is a crucial part of business, it can be tedious and time-consuming. When paperwork piles up, a business loses critical time that could have been spent on revenue-generating activities. In such situations, PEOs can be useful businesses, helping them outsource tasks such as record-keeping and benefits management. The time saved on such activities can be utilized toward growth initiatives for the business.

3. Payroll is too time-consuming
How a company processes its payroll can have a direct impact on employee morale. For instance, if an organization frequently delays the payment of salaries or processes the wrong payroll, employees can start feeling dissatisfied. These problems usually occur when a company is unable to manage payroll efficiently. Here, a PEO can provide help with timely payroll processing. The PEO will also help ensure accurate calculations, remittances, and tax filings.

4. Compliance issues
Businesses often have to ensure adherence to a wide variety of rules and regulations. If they do not comply with laws, they are at risk of a lawsuit. In such cases, a PEO can offer businesses access to a team of experts and advisors with in-depth and updated knowledge of state and federal employment laws. This way, businesses can get help keeping up with ACA compliance, tax laws, ERISA, and HIPAA, among other laws.