In our continuing series on California payroll, we’ve given you extensive information about the benefits of outsourcing to a payroll agency. However, a payroll agency is subject to certain limitations. Let’s investigate the professional employer organization (PEO) to determine if it’s a better option for your small business.
Looking into a business arrangement with a professional employer organization makes financial sense. Unlike outsourcing payroll related tasks to a payroll agency, where you remain the sole employer, under the PEO umbrella a co-employment connection is initiated.
In simple language, the professional employer organization will co-employ your employees. As the owner of a small business, you’ll be able to focus on day-to-day operations, such as sales and customer service. The PEO will take care of employee related tasks, such as payroll, human resources, taxes, benefits, recruiting and retention.
Since PEO’s have extensive risk management experience, your employees will enjoy a safer, improved worksite. The PEO will be able to offer your employees an upgraded benefit package, which even includes dental and vision care.
You will retain operational control and ownership of your company. Both you and the PEO will be responsible for any company liabilities, excepting those related to payroll taxes and employee benefits.
One caveat of your association with a PEO is that they will keep all employee personal records and assume the privilege of hiring and firing. If you have carefully built your business, where employees are considered like family, handing the reins to a PEO to make life-altering decisions may not be suitable.
Bottom line, it’s a matter of personal preference. How much control are you willing to relinquish? The payroll agency will work for you. The professional employer organization will work with you.