8 Questions To Ask Before Choosing A PEO

Whether you’re looking for a comprehensive HR solution or support for your current people and processes, a professional employer organization – often referred to as a PEO – can provide products and services that address your unique HR needs while also helping to minimize costs, reduce risk, and increase productivity.

If you’re considering outsourcing some, or all, of your human resources responsibilities with a PEO, it’s a good idea to ask some key questions of potential partners before you sign on the dotted line.

Here are eight questions to consider asking a PEO to help ensure you find the best HR partner for your business:

Can you explain what a PEO arrangement looks like with your organization?

In most PEO arrangements, a business enters into a co-employment relationship with a PEO provider—giving them the authority to act as the “employer of record” for the company’s employees. This allows the PEO to perform employment-related tasks on your behalf and assume much of the administrative responsibilities and liabilities associated with carrying employees, and, in turn, allows you to focus more time and energy on growing your business. Note: In a PEO relationship, the company owner maintains complete control of the business.

What exactly will I be paying for with your PEO services?

Most PEOs charge for their services in one of two ways: either as a percentage of total payroll (typically between 3-8 percent), or as a flat per-employee-per-year (PEPY) fee. In both cases, the exact price or rate will often depend on which pre-set bundle of services you select. Before making any decisions, it’s best to know exactly what you’re getting. Ask to see the package broken down into line items. This allows you to clearly understand the services you will, and will not, be receiving. If a key service you’re looking for (such as Affordable Care Act compliance assistance, for example) isn’t listed, you may need to continue discussions.

How are your PEO services structured?

Are you looking at partnering with a PEO that is more of a software solution with back-end support, or are you interested in a full-service partner, like G&A, with a designated service team who will get to know you and your business? When you hire a PEO, they function as an extension of your business. As the employer of record for your employees, it’s your PEO’s job to be there to answer your questions (as well as your employees’ questions) about employment-related matters. That’s why it’s important to know who will be servicing your account on a day-to-day basis. Will you have an assigned HR advisor? Will you have an employee benefits specialist available to take your calls? Who will your employees contact if they forget how to reprint their W-2? While these may not seem like crucial questions during the initial process of selecting a PEO, understanding how your relationship with your PEO will work can have a huge impact on the success of that relationship in the future.

What kind of PEO technology or software does your company provide?

One of the many perks of partnering with a PEO is gaining access to new and upgraded human capital management technology. Make sure to ask what technology they offer, particularly if you’d like to continue using programs that you’ve already purchased, or if you have specific technology needs in mind.

Do you provide training or professional development for my employees?

Human resources encompasses more than just payroll and benefits administration. Professional development and employee training opportunities are not only attractive to potential candidates, but they also allow you to maximize the potential of your current workforce. If this is an important aspect of your organizational culture, you’ll want to make sure that your PEO offers these services as well.

What kind of employee benefits plans are available with your PEO?

The most sought-after employers know that today’s top talent is looking for more than just a paycheck – they also want a high-quality and affordable employee benefits package. That means a great selection of top-tier health insurance and retirement savings plans, corporate wellness programs, life insurance, etc. Prior to choosing a PEO, find out which carriers they partner with and what kinds of plans they’re able to offer. This will help ensure you’re able to put together a competitive benefits package that meets your employees’ needs, expectations, and lifestyles.

What is my role when it comes to taxes and regulatory compliance?

Since your PEO will become a co-employer for all of your employees, they will assume both the liability and responsibility for managing and reporting your employees’ payroll and unemployment taxes. In addition, they should assume much of the responsibility for ensuring that your employees are covered and protected under all applicable state and federal labor laws.

What’s your reputation?

This is perhaps the most important question you should ask before you hire a PEO. It’s important to do your research, so you know who you’re doing business with. Find out how long they’ve been in business, what their clients say about them, and what kind of geographic presence they have (in case you expand into additional areas). Ask to see audited financial statements, federal, state, and local licenses, industry awards and/or accolades, certifications (such as the CPEO certification through the IRS), and any accreditations they’ve received. Whether you’re looking at hiring a national or local PEO, you want to ensure they’re in good standing and that they have a solid, reputable business.

For more information about hiring a PEO, click the link below to download our PEO Purchasing Guide—a comprehensive report that walks you through the purchasing process from start to finish.

Download our PEO Purchasing Guide

A Trusted PEO Partner for Your Business and Your Employees

If you’re looking for a trusted PEO partner that offers award-winning client service, top-tier employee benefits plans and more than 25 years of HR experience, consider G&A Partners. As a leader in the PEO and HR outsourcing industry, we specialize in working side-by-side with business owners just like you to design the HR support and solutions that give you time back to grow your business.