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What Size Company Should Use a PEO?

While there is no is no ideal company size for a PEO partnership, most businesses with anywhere from 5-500 employees can benefit from this type of HR outsourcing. Engaging with a professional employer organization (PEO) for small businesses and mid-sized organizations has surged in popularity as more companies realize the benefits – including streamlined HR processes, affordable, top-tier employee benefits packages, access to expert guidance on compliance matters, and cost savings through economies of scale.

If you’re considering partnering with a PEO, it’s important to find the right fit – one that will provide the services and resources that meet the needs of your unique business.

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What size companies benefit from a PEO the most?

Depending on what you’re trying to achieve, you can reap the benefits of using a PEO framework no matter the size of your business. While smaller companies may be a more common client, there is no “best” company size for a PEO.

Every business has a need for dependable HR services — and whether you’re handling all HR tasks on your own or have an in-house team needing extra support – partnering with a PEO provides you with comprehensive HR solutions, streamlined operations, and expert guidance, empowering you and your team to focus on core business objectives and foster sustained growth.

Why would a business use a PEO with just a few employees?

A significant challenge small-business owners face is attracting and retaining highly qualified employees – the kind who are often lured away by larger companies with more attractive benefits packages. This issue is no surprise, but it can be incredibly frustrating.

Today’s employees expect to be provided competitive benefits ranging from top-tier medical insurance to dental, vision, retirement, life insurance, and more. But if you run a small company, finding high-quality, affordable benefits for your employees can feel like an impossible task. It doesn’t have to be.

One major advantage of working with a PEO is that they make it possible for small businesses to offer benefits that are competitive with Fortune 500 companies – at an affordable price. How is this possible?

When you engage a PEO, your company enters into a co-employment relationship with the professional employer organization. The PEO becomes the employer of record for your business, which means you share liability with the PEO on employee-related matters. However, you retain full control of the day-to-day operations and management of your business and employees.

This unique arrangement allows PEOs such as G&A Partners to put economies of scale to work in your favor. PEOs work with hundreds, even thousands, of clients. As a result, they can leverage their buying power to negotiate better benefits at more affordable prices.

In addition to better, more affordable benefits, a PEO can also help you:

  • Unload and streamline HR tasks
  • Maintain legal compliance
  • Grow and scale efficiently
  • Attract the best talent
  • Keep employees safe

To find out if a PEO is a good fit for your company’s size, contact G&A Partners.

Can large companies use a PEO?

Yes, large companies can — and often do — use a PEO for various HR functions. Again, it’s important to note that neither small nor large companies make “better” candidates for working with a PEO. It’s all about what your organization needs.

Why would a large company use a PEO?

While PEOs are often associated with supporting small and medium-sized businesses, large companies can also find them valuable for several reasons:

  • Streamlining HR Operations: Large organizations might have geographically dispersed teams or complex business structures. A PEO can take over tasks like payroll processing, benefits administration, and workers' compensation, freeing up internal HR teams to focus on strategic initiatives like employee engagement or talent acquisition.
  • Expertise and Cost Efficiency: PEOs handle HR for multiple clients, giving them access to a wider range of resources and expertise compared to what an in-house HR team at a single company might have. This can be particularly beneficial in areas like compliance, where staying up-to-date on regulations can be time-consuming and expensive.
  • Risk Management: As a co-employer, a PEO shares some of the legal responsibility for payroll taxes and employee benefits. This can be helpful for large companies looking to mitigate risk, particularly in areas like workers' compensation claims or compliance issues.
  • Scalability and Flexibility: As a large company grows or shrinks, its HR needs might fluctuate. A PEO provides a flexible solution, allowing the company to easily scale its HR services up or down as needed.

When should a company use a PEO?

You should strongly consider working with a PEO when your priorities include:

  • Accessing better, more affordable benefits.
  • Maintaining legal compliance.
  • Growing & scaling efficiently.
  • Attracting the best talent.
  • Keeping employees safe.

Partnering with a PEO enables you to provide your employees with Fortune 500-level benefits, regardless of your company size. But that’s just one advantage. Research shows that organizations that use a PEO are not only “50% less likely to go out of business,” but they grow “7% to 9% percent faster” as well.

A separate study conducted by Guardian found that the most frequently reported advantages of working with a PEO include:

  • Improved legal and regulatory compliance.
  • Reduced costs, particularly around accounting and payroll processing.
  • Added resources for workforce planning and cybersecurity initiatives.
  • Benefits administration, including comprehensive support and communication.

Is your company in need of a PEO?

If you need any or all of the following, you should consider working with a PEO:

  • HR Management: Access comprehensive HR services and a trusted team of HR experts ready to support your organization and employees.
  • Health Insurance & Benefits: Provide your employees with access to Fortune 500-level health insurance and benefits, with support from industry experts.
  • HR Consulting: Gain insights into how your organization can increase employee engagement, develop competitive benefits offerings, and more.
  • Payroll Administration: Deliver accurate, reliable, and timely paychecks to your employees through payroll processing services.
  • HR Technology: Use innovative HR software to manage day-to-day tasks in a way that reduces errors, increases productivity, and saves time.

How G&A Can Help

G&A Partners offers access to HR experts with years of experience helping businesses develop their employees, improve their workplace cultures, implement new HR processes and procedures, and more. Schedule a consultation with one of our trusted business advisors to learn more.