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Key Questions You Wanted to Ask About PEOs

When you talk about a professional employer organization (PEO), they are the ones who offer human resource services for their small business clients. They can take care of wage payments, taxes, and assist with compliance with myriad state and federal rules and regulations. Then some workers have access to 401(K) plans. Then they can also take care of health, dental and life insurance, dental care and other benefits which are not provided by the small business. It allows the PEO clients to focus on the core competencies to maintain and grow the profits.

Are You The Right Candidate For A PEO?

PEO is more valuable for any business than an employee leasing company. More and more companies are using PEO arrangement because they offer services which are more useful in conjunction with the existing human resource department. The PEO clients come from different businesses ranging from accounting firms to high-tech companies and small manufacturers.

How Does This Arrangement Work?

Once a client company gives work to a PEO, it co-employs the client’s worksite employees. The client service agreement governs the relationship. The PEO remits wages and withholds the worksite employees and reports and also deposits employment taxes with authorities. A PEO also issues the form W-2 for the compensation that’s paid by it under the EIN. The client company takes responsibility for and manages the product development and production, business operations and other related functions. The PEO often takes the full responsibility of human resource and other benefit packages for the work-site employees.

Do state levels organize a PEO?

You can find PEO operating in all the states across the US. Some states provide some form of specific licensing, registration for them. The authorities recognize them as the employer or co-employer of the worksite employees for many purposes. It includes compensation for the workers and the state taxes.  A PEO has the right to withhold and remit federal and income and unemployment taxes.

But Why Do You Need a PEO?

The business owners want to focus their time and energy on their businesses and not on the management of human resources. Most small business owners don’t have the needed human resource training, payroll and accounting skills as well. Then they don’t know the regulatory compliances, and they don’t know about the risk management, insurance, employee benefits and other benefits that are offered by the large employers. PEOs provide all the benefits to the co-employees of the client organization and that too at far lower rates.

And How It Can Help Control Costs and Garner Profits?

With the help of a PEO, the client company can lower the employment costs and grow the profits as well. The clients can run their business with a more straightforward HR function. You’ll have to small upfront fee for availing the services of a PEO.


PEOs are not an employee leasing company who contracts the employees. They are the ones who co-employ your people and take care of all the employee benefits and much more.

Sunder Singh
Sunder Singhhttps://myvigour.com/
Sunder is a techie guy who loves to write about anything that is directly or remotely connected with technology. From hardcore tech stories to the overall influence of technology in life, Sunder is passionate about all things internet. When he is not surfing the internet, he is busy grooving on his favorite beats.
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