Human Resource services are increasingly demanding particularly with the increasing number of remote jobs, that involves dealing with compliance across many states; most businesses struggle with recruiting and retaining top talent which leads to low benefits to the company. A PEO can help. 

PEO employs employees for their clients; Organizations; enters an employment relationship with a client by leasing employees to the client and also manages their payroll services, HR administration, tax compliance, and employee benefit.   this enables the employer to focus more time on the core activities of the organization.

How does the PEO work?

PEO handles employment-related human resource managerial work; This depends on the agreement between the PEO and the client which can either be full or co-employing responsibilities.

Co-Employing responsibilities

This is where both the PEO and employer employ employees; basically, they split up the employer’s responsibilities. PEOs handle the technology, HR proficiency, and established processes; letting employers save time and focus on the key administrative functions and keeping the business compliant. 

This includes:

  • Payroll: PEO employs the employees, processes their salaries and wages pays the employees, takes over the withholding, tax payment, and more.
  • Employee benefits: for larger companies, PEO can influence its economies of scale to hammer out pricing with providers, rationalize employee staffing, and process claims.
  • Human resource compliance: rules and regulations regarding Labour and employment vary in different states and can be very complicated; PEO helps employers avoid costly fines by following those rules and regulations to the latter.
  • The employer maintains full authority over product research and development, product life cycle, including the marketing, sales, and customer support, and the employees, including those to hire, to lay off, and their pay.

Advantages of PEO

Beneficial support

PEO can create onboarding and training services; develop a commanding customer service crew, and help in determining the implications of the acquisition of employees and how they affect the company’s performance.

Employee benefits

They provide cost-effective employee benefits as they can combine the employees of the firms that they handle to negotiate for lower coverage costs; they handle the enrolment of the employees, negotiate with the insurance providers and the other legal obligations.

Workers Compensation

PEO helps companies save time and money by managing the company workers’ compensations through their insurance program; often they handle tasks like answering employees’ accident questions, filling out paperwork, and conducting audits; this is majorly through their team of experts who understand the key functions of each business.

Legal support

Often, the PEOs offer a team of human resource specialists like lawyers to assist in navigating and managing risk, answering questions related to the payroll issues and the law surrounding the employees, they provide guidance in setting employment-related goals and in decision making. they stay updated with the rules and regulations regarding human resource activities this enables the company to simply follow and conform with the rules and also progress their operations effectively.


PEO processes the company’s payroll including the documentation, tax withholding sick day accruals, and leave management. Mostly, they set up an automatic payroll system that pays the employees on specific dates of the month directly and sends the business employee-related reports like the muster roll and payslips to the various employees. They also help employees save money for their retirement; help companies create programs that are beneficial to the employees that will help them stay in the company for a long time hence limiting the employee turnover rate.

Employee performance

PEO helps in the creation and implementation of the employee review by helping with the employee evaluation, supervisors, and managers training on how to evaluate and give employees resources that will make them grow within the company. they also help in the training and development of employees, the creation of employee training calendars, and training goals to help them maximize their productivity.


PEO helps in the creation of a job description to attract potential employees, training the hiring team on how to find the best candidate, and even offering suggestions on attractive and affordable salaries for the positions. This will help the company focus on the core activities of the business enabling them to grow more quickly as they will be having the right candidate they need on time.

Related: Payroll Outsourcing; Digital competent payroll solutions

Related: Corporate Governance in family-owned businesses; How to succeed in running a family-owned business.

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