Partnering with a PEO can seem intimidating, especially for entrepreneurs. You’ve poured your lifeblood into your business, and now someone wants you to hand over the reins? Not likely
But what if I told you that working with a PEO will actually give you more time and resources to invest in your business, your staff, and your vision? What if partnering with a PEO represented freedom instead of lost control? And what if it could save you money in the process?
I bet you could get on board with that.
Good news—it’s all true. But first you have to stop believing the PEO myths.
3 Myths You Might Believe About PEOs
If you’re drowning in paperwork but still shying away from a PEO, it could be because you believe one of these myths:
- I’ll lose decision-making power. Perhaps more than anything else, entrepreneurs fear losing control of the business they’ve built with their blood, sweat, and tears. But a PEO partnership isn’t a hostile takeover. The PEO’s goal is to help you with administrative tasks that suck away hours of your life each week—tasks like compliance research, tax preparation and filing, employee handbook preparation, benefits administration, payroll, and risk management. And the core activities of your business? Still completely in your ball court.
- All HR outsourcing is basically the same. You’ve seen the acronyms: HRO, ASO, PEO. They’re all the same right? Well, no. The primary difference between a PEO and other outsourcing models is that a PEO becomes your co-employer. That means you’ll file taxes under the PEO’s tax identification number, and the PEO will share both the risk and the burden of employment. The co-employment model benefits your employees by giving them increased job security, access to better benefits and retirement plans, and increased safety oversight. If you decide to end your relationship with the PEO, however, your workers remain on your payroll.
- It won’t really save me money. Once you pay the PEO’s fee, will you really see any cost savings? Absolutely. Here are three ways PEOs save you money:
- Economy of scale—PEOs can get better insurance rates based on the volume of people they employ. That translates into cost savings for you.
- Efficiency—If you spend 10 hours per week on HR tasks like compliance and vendor management (or you pay someone else to do it for you), that’s 10 hours of productivity lost. If you turn those tasks over to a PEO, you can focus your attention (and that of your employees) on getting critical business activities off your to-do list.
- Growth—As the business owner, is your time best spent pushing paper or investing in new ideas for growth? No-brainer, right? Let the PEO take over the paper-pushing so you can build the business you’ve always dreamed of.
One More Myth: Is a PEO Your Magic Wand?
Remember that scene in The Sorcerer’s Apprentice where the mops and buckets are merrily swishing away while the apprentice kicks back and relaxes? And then it all spirals out of control while the apprentice watches his labor saving devices destroy the room.
Don’t be the apprentice.
Yes, a PEO can save you hours of work each week. Yes, it can cut costs and give you time to grow your business. But don’t assume that it will eliminate all busy work from your life forever. If you do, you’ll be sorely disappointed—and you could see your carefully constructed plans spiral out of control.
A PEO can give you the freedom you need to focus on the most important activities of running your business, but it’s not a magic wand. It’s a partnership.
And it could be the solution you’ve been waiting for to help you cut costs and increase productivity so you can take the next step.