What exactly is a PEO?

Our team of advisors have been lucky enough to work in the PEO industry for a number of years. We are a team of HR professionals, insurance professionals and client evangelists. We strive to help our client's and their friends focus on the business of business,rather than the busy-ness of business.

We wanted to begin a series of Blog posts answering the questions of, What is a PEO? and the benefits surrounding the PEO concept.In future posts we will attempt to address the advantages of outsourcing your non-profit generating activities to a PEO, the types of businesses that are a great fir for a PEO and how a PEO helps you, the business owmer control costs, amongst others.

As always, if you have a question you can reach a trusted advisor by calling 877-634-7787 and we will be honored to help you. Now on to the blog.

A PEO defined: The National Association of Professional E,mployer Organizations define a PEO as

Professional employer organizations (PEOs) enable clients to cost-effectively outsource the management of human resources, employee benefits, payroll and workers' compensation. PEO clients focus on their core competencies to maintain and grow their bottom line.
Businesses today need help managing increasingly complex employee related matters such as health benefits, workers' compensation claims, payroll, payroll tax compliance, and unemployment insurance claims. They contract with a PEO to assume these responsibilities and provide expertise in human resources management. This allows the PEO client to concentrate on the operational and revenue-producing side of its operations.

A PEO provides integrated services to effectively manage critical human resource responsibilities and employer risks for clients. A PEO delivers these services by establishing and maintaining an employer relationship with the employees at the client's worksite and by contractually assuming certain employer rights, responsibilities, and risk.

That being said, here at we like to offer this as a perspective:

Outsourcing — the practice of using outside firms to handle work normally performed within a company — is a familiar concept to many entrepreneurs. Small companies routinely outsource their payroll processing, accounting, distribution, and many other important functions — often because they have no other choice. Many large companies turn to outsourcing to cut costs. In response, entire industries have evolved to serve companies' outsourcing needs.

But not many businesses thoroughly understand the benefits of outsourcing. It's true that outsourcing can save money, but that's not the only (or even the most important) reason to do it. As many firms discovered during the outsourcing "mania" of the early 1990s, outsourcing too much can be an even bigger mistake than not outsourcing any work at all. The flat economy caused many companies into huge layoffs and subsequently outsourced functions that were better kept in-house. Wise outsourcing, however, can provide a number of long-term benefits:

Control capital costs. Cost-cutting may not be the only reason to outsource, but it's certainly a major factor. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business. Outsourcing can also make your firm more attractive to investors, since you're able to pump more capital directly into revenue-producing activities.

Increase efficiency. Companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. An outside provider's cost structure and economy of scale can give your firm an important competitive advantage.

Reduce labor costs. Hiring and training staff for short-term or peripheral projects can be very expensive, and temporary employees don't always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.

Start new projects quickly. A good outsourcing firm has the resources to start a project right away. Handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support they need. And if a project requires major capital investments (such as building a series of distribution centers), the startup process can be even more difficult.

Focus on your core business. Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly.

Level the playing field. Most small firms simply can't afford to match the in-house support services that larger companies maintain. Outsourcing can help small firms act "big" by giving them access to the same economies of scale, efficiency, and expertise that large companies enjoy.

Reduce risk. Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions, and technologies all change very quickly. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise.

A tip of the hat to for that piece.

First Place Employer Services encompasses reaching the most compatible PEO's while ensuring accurate and fair quotes, assuring proper client and PEO
partnership.
Through our services, any company, in any industry, can streamline their
efforts, protect against unnecessary liabilities, provide Fortune 500 level
employee benefit packages, rest assured that government compliances are met,
reduce administrative costs, institute essential human capital programs, and
more. All of this without losing control of their business and their vision.

Payroll: To Outsource or Not That is the Question

A recent article from Business Week presents a fair description of the pros and cons of outsourcing. Our advisors at First Place Employer Services wanted to share our thoughts on the benefits of outsourcing.

For small to medium businesses, an in-house payroll service can be a costly overhead. If you consider the number of hours employees devote to payroll-related activities, along with production costs such as printing and distributing checks and creating tax documents, final costs can mount up. Compared to plans offered by payroll-service providers, it is easy to see why an increasing number of companies are choosing to outsource its payroll.

Fact:Payroll management is a time-consuming activity. By outsourcing this responsibility the administrative burden is removed, allowing employees more time to focus on being more productive on the core business.

Fact:Payroll mistakes can be costly for a company. Outsourcing your payroll will give you peace of mind knowing that every aspect of your payroll is being taken care of by professionals with very high accuracy.

Fact:In-house payroll activities function as reliably as the people doing the work meaning annual leave and sick days can affect productivity.

With a payroll service, output speed and quality will be constant as a trained professional will always be on hand. It will also save time on helping new hires understand the business’s payroll system.

Fact:Since payroll-services providers are specialists with vast technical resources at their disposal, they can process even the most complex payrolls to your satisfaction.

A good payroll-services provider will know all the ins and outs of payroll-related tax laws and regulatory mandates on the federal, state and local levels. Many companies have a generalist on staff and do not employ the skill set to understand the ever changing rules and regulations behind governmental regulations.

This compliance is the value propisition behind outsourcing your payroll. If pay checks are delayed or paperwork is mishandled, it’s the payroll-services provider’s responsibility to fix things.

With a professional client-centric like First Place Employer Services on your team; You can switch to another service provider in a snap – even if you have to absorb a portion of an existing service contract. Try firing, hiring and training in-house payroll staff in anything less than several weeks.

Boring, repetitive payroll work can act like an anchor on your business. Your staff, when freed of payroll responsibilities, will be free to focus on other, more creative work.

Do you have the time and energy to closely supervise your business’s payroll for time and rate abuse? Most payroll services firms have technologies that can spot and alert clients to various types of payroll abnormalities.


There’s a lot to be said for the peace of mind that outsourcing payroll services can bring to a business owner or manager. No headaches, no hassles: You’re left to focus on running a profitable business.

Outsourcing: Is It Critical to My Business?

Owning your own business is the American dream. Doin it better than the other guy and making money at it! There is no better feeling in the world. All start out as entreprenuers and some evolve into "The Business Owner". We all know that guy, he is over taxed, under paid, provider of employee benfits, redeemer of social ills, and compares managing employees to the herding of cats.

The solution, we think, is Outsource it! A fantastic article published on the businessTN website (http://www.businesstn.com/pub/4_5/features/8119-1.html) discusses the ins and outs of outsourcing. As a proponenet of outsourcing I found this article both eye opening and well balanced. More and more, the experts are touting the profit enhancing benefits of outsourcing.

“Outsource,” they say—in the name of freeing you and your employees up to concentrate on your business’ core competencies. “We generally say you need to outsource anything that takes you off-focus,” says Paula Roberts, small business specialist for the Tennessee Small Business Development Center at Tennessee State University.

Mrs. Roberts makes an excellent point. Every business owner can identify with the burn out of dealing with the non-profit generating tasks of payroll, workers' compensation insurance, employee benefits, and more. The article further suggests a business owner look at what can be done in-house. Jeff Cornwall, director of the Belmont University Entrepreneur Center, says “[Business owners] need to understand the financial structure of the business and understand cash flow because they’ll have to make decisions based on that information.”

The experienced, trusted advisors at First Place Employer Services suggest a business owner first identify the core business activities. These activities are profit generating activities. in taking this vital step, the business saves time, increases productivity, and ultimately takes steps to become more profitable.

Jeff and Rich Sloan of StartUpNation, a Web site the Sloan brothers launched to provide information to entrepreneurs, advise taking the time to analyze how the business adds value to your customers and where you, as a business owner, focus your efforts.
“Are you spending too much time on areas outside your expertise? Many times, it’s more cost-effective to have someone outside of the company take care of these non-core activities,” the Sloan brothers write. Cornwall says today’s customers are concerned with more than just the price of the product or service you provide. “They come to you because of how you operate and provide that service to them,” he says.

Committment to service is one of many reasons a business owner finds a PEO ( Professional Employer Organization) an attractive outsourcing option. When it comes to payroll processing, HR management, State and Federal taxes, Workers' compensation insurance, Safety, OSHA, and the myriad of Federal and State laws; the choice to outsource to a PEO becomes all to clear.

A Professional Employer Organization (PEO) helps client companies cost-effectively outsource the management of payroll, workers' compensation, human resources and employee benefits. PEOs help clients focus on their core competencies to maintain and grow their bottom line.
Businesses today need help managing increasingly complex employee related matters such as health benefits, workers' compensation claims, payroll, payroll tax compliance, and unemployment insurance claims.

Engaging a PEO enables companies to share these responsibilities and provide expertise in human resources management. This allows PEO clients to focus on the operational and revenue-producing side of their business.

PEO companies provide an integrated service to effectively manage human resource responsibilities and employer risks for their clients. A PEO delivers these services by establishing and maintaining an employer relationship with the employees at the client's worksite and by contractually assuming certain employer rights, responsibilities and risk.
Professional Employer Organizations have thrived because they have helped their client companies succeed by providing:

Improved employment practices, compliance and risk management to reduce liabilities.
Relief from the burden of employment administration.
A wide range of personnel management solutions through a team of professionals.
Access to a comprehensive employee benefits package, allowing clients to be competitive in the labor market.

Definition provided courtesy of the National Association of Professional Employer Organizations - NAPEO

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http://www.1stplacEmployer.com