CGIS offers PEO Services to Help Small Businesses Save
PEOs (Professional Employer Organizations) are single source providers of integrated services which allow owners of businesses to outsource the management of human resources, employee benefits, payroll and workers’ compensation and other strategic services, such as recruiting, risk/safety management, and training and development. PEOs can also offer basic levels of background & drug screening. As of 2010, 5 + million U.S. workers were covered by PEO’s, with more than 700 PEO’s in operation.
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Why Use a PEO
Unless you are an employment expert, with experience in HR, payroll, insurance, benefits, risk management and regulatory compliance; you’ll want to consider a PEO. These companies make it possible for business owners to focus on what it takes to grow their business while they handle administrative functions with expert attention. As a PEO client, you don’t have to devote your valuable time tracking payroll or negotiating rates with benefit providers. Nor do you have to hire additional staff to manage it for you. Companies who use PEOs gain economies of scale with employee benefits like Health Insurance, Retirement Plans, and also achieve considerable savings in Workman’s Compensation rates and other Accident policies. It is a cost effective means for smaller businesses to gain access to large health care groups at competitive rates due to the large group size and buying power of the PEOs. Also, by legally contracting out responsibilities related to its employees, the company using the PEO offsets a great amount of risk and tax liabilities to the PEO.
How do PEOs work?
PEOs work by legally hiring their client company’s employees, thus becoming their employer of record for tax purposes and insurance purposes. This practice is known as co-employment. With co-employment, the PEO files paperwork on behalf of the business but under its own identification numbers.
The client company still directs the employee’s daily activities and administration, while the PEO’s administer the human resources and payroll functions of the client company for a fee. The fee for these services generally ranges between 1% – 3% of the total payroll and is applied in addition to the standard employee overhead costs (like a business’s share of Medicare, FICA and unemployment insurance withholding).
A common misconception about PEO’ is that they may limit an employer’s options when dealing with employees. On the contrary, PEO’s do not participate in the running of the client’s business or decision making. Though PEOs can take on hiring tasks when necessary, if desired the client company can retains responsibility for hiring, firing, supervision etc.
Benefits of PEOs
A good PEO can help you attract and retain the best quality employee’s by enhancing your benefit options, improve productivity ultimately increasing your profitability, reduce your employment liability and minimize the need for separate transactional HR departments. Essentially, PEO’s allow business owners to focus on the core of their business. PEO’s at a glance:
- PEOs provide relief from the burden of employment administration.
- PEOs provide a benefit rich program due to large economies of scale with their large pool of employees.
- PEOs offer a wide range of personnel management solutions through a team of PEO professionals who are expert at employee administration.
- PEOs improve employment practices by adhering to compliance and risk management standards leading to reduced liabilities.
- PEOs provide access to a comprehensive employee benefits package, allowing client companies to be competitive in the labor market by offering their potential employees the very best.
- PEOs provide assistance in improving productivity and profitability.
PEO’s & Workmans Compensation Insurance
One of the major benefits of PEO’s is their ability to secure affordable Workers Compensation insurance coverage for their client companies by pooling the buying power of companies to reduce overall rates on Worker’s Comp Insurance. PEO’s can provide this Worker’s Comp insurance at a lower rate than businesses may be able to obtain on their own.
If you’re not experienced in insurance administration, handling workers compensation insurance and claims can be a daunting task. Employers must ensure appropriate and adequate coverage is in place, premiums are paid, audits are accurate and renewals are timely. In the unfortunate event that one of a business’s employees is injured, submitting injury reports to workers compensation insurance carriers and medical professionals can take a lot of time and energy. Errors and omissions in this area can be particularly costly.
By working with an experienced PEO, employers can hand over these tasks to professionals in the field – specialists who know how to handle industry specific policy administration, injury claim administration and safety compliance.
PEOs and Employee Benefits
PEOs can offer smaller companies access to competitively priced employee benefits. By pooling many small groups together, PEOs can obtain superior pricing from insurance carriers by allowing them to spread the risk across a large group of participants. PEOs also have the expertise and inside track on crafting together different types of tiered programs for participants, which can mix and match different programs and provide a very benefit rich program at significantly lower rates than what most companies can negotiate on their own.
PEOs and Taxes
Payroll tax problems can wreck havoc on a business. By shifting the legal liability for all tax related issues to the Employer on Record, i.e. the PEO Company, the client company has created a shield, and the responsibility to prove or disprove any audit related questions falls on the shoulders of the PEO company. The PEO company files all taxes under its own Tax Identification Number due to the Co Employment agreement and assumes responsibility and liability for payment of wages, compliance with rules and regulations governing the reporting and payment of state and federal taxes.
Choose CGIS for PEO Administration
At CGIS we are experts at PEO administration. We have the knowledge and expertise in the PEO business – allowing business owners to focus on growing their business by getting back to their core competencies.
Our goal is to protect our client’s assets and shareholder value. Our risk management and loss mitigation services complement our clients on a local, national and international level. We’re here to help protect your business. Contact us today for more information about our PEO services.