Advantages and Disadvantages of a Professional Employer Organization (PEO), the Next Blog from Author/CEO-Charles Read of PayrollOnABudget

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Advantages and Disadvantages of a PEO in the small business market: costs, savings, overhead, usage, licensing and risks.

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“Our experience over the last 20 years, is that it is never cheaper to use a PEO,” states Charles Read.

What is a PEO? PEO stands for “Professional Employer Organization”. The trade organization for PEO’s is the National Association of Professional Employer Organizations (NAPEO) which was what the National Staff Association changed its name to in 1994 after 10 years in business.

According to the NAPEO a PEO allows businesses to outsource a number of employee associated functions including Human Resource Management, Employee Benefit Management, Employee Payroll and Workers Compensation Insurance in a cost effective manner.

The NAPEO goes on to say they relieve their clients of the burden of administering critical employee related functions, reduced liabilities, increases competitiveness and improves the bottom line of their clients.

What PEOs really do is provide a way for employers to buy insurance products, payroll processing and possibly some basic HR services in a single package with a high administrative cost added on top. PEOs will say that they “Assume certain employer rights, responsibilities and risk.” Many of the States they operate in disagree. Most States have rules that PEOs are co-employers or joint employers and that the actual employer retains all of the risk.

“Our experience over the last 20 years, is that it is never cheaper to use a PEO,” states Charles Read. In our experience the savings are always at least $1000.00 per employee per year and sometimes more than twice that. Before going with a PEO, analyze what they are offering and what it is really worth to the company.

To access the video blog and article, go to:

PayrollOnABudget is the leading online payroll processing services company with a focus on offices of 10 people or less. ( One of only a few payroll firms with CPAs on staff to assist clients, the company was designed to save both time and money by providing all payroll related services – including tax filings and more.
Payroll On A Budget

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