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There’s no doubt that starting, managing, and growing a small business is a huge challenge. Most small business owners began with a passion for delivering an exceptional product or service to their customers, and it is this motivation that drives their success. However, as a business continues to grow, so do the administrative and human resource responsibilities. While small business owners are used to wearing many hats, they often don’t have the time or expertise to manage all the HR tasks, compliance requirements, and risk management a growing business requires.

This is where a Professional Employer Organization (PEO) can make a big difference.

A PEO works with small businesses to help them manage payroll, support HR administration and compliance, secure better benefits and services, and ensure safety and risk management strategies are in place. While some small businesses may worry that working with a PEO means giving up control, the reality is that a PEO is a strategic partner. Instead of spending valuable time and energy on day-to-day administration, a PEO removes unnecessary distractions, allowing small businesses to grow and thrive.

The Benefits of a PEO for Small Businesses

While many small businesses turn to PEOs to manage their HR tasks and improve employee benefits, the advantages go well beyond these services. According to research from the National Association of Professional Employer Organizations (NAPEO), businesses that work with a PEO grow 7% to 9% faster and are 50% less likely to go out of business.

In fact, based on further analysis by NAPEO, the average client of a PEO can expect a 27.2% return on investment based on cost savings alone.

Let’s look at some other services PEOs offer that can benefit your small business—and lead to major returns on your investment.

Candidate Recruitment

Talent acquisition is critical to business success, but finding and hiring the right talent is no easy feat. A small business may need to hire quickly to keep up with rapid growth, and this can present a major challenge for an HR team already occupied with daily administration and compliance tasks. While not all PEOs offer recruitment services, those that do, like Ethan Allen, provide small businesses with a critical advantage. From job descriptions and application management to comprehensive resume screening, interviews, and background checks, a PEO can be the key to hiring top talent for your team.

HR Strategy

A focused human resources plan is an important aspect of your overall business strategy and links your organization’s short and long-term goals. However, designing, implementing, and maintaining an HR strategy can be a challenge for a small business. By partnering with a PEO, you get dedicated support and a team of HR experts who can help you navigate complex employer laws, manage employee onboarding and records, align your business goals with your HR policies, and offer training that improves employee relations. With the support of a PEO, you can transform your small business and access new capabilities that will help your company in the long run.

Compliance and Risk Management

For a small business, keeping up with federal and state regulations is challenging and time consuming. To stay compliant and avoid lawsuits, small businesses must understand labor laws like the Fair Labor Standards Act, the Family and Medical Leave Act, the Affordable Care Act, and many more. Unfortunately, in recent years, employment-related settlements have reached all-time highs and lawsuits can cost even small companies millions of dollars. By partnering with a PEO, small businesses get the protection and support they need to stay compliant and avoid risk. It is the PEO’s job to know the relevant regulations inside and out and ensure that your employees and business are protected.

Employee Safety

Similar to compliance, workplace safety is a major issue for small businesses. Accidents not only impact the bottom line, but they can also damage employee morale and trust. Unlike many small businesses, PEOs know what it takes to keep your employees safe. It’s their job to develop comprehensive safety programs to train your workforce and keep your business compliant. A PEO will also conduct background checks on new employees, and manage any workers’ compensation, disability, and unemployment claims, freeing you up to focus on growing your business.

Is a PEO right for your small business?

While any organization looking to save time and money on human resources could benefit from working with a PEO, small businesses and startups will often benefit the most. If you’re still in the early stages of building your business, partnering with a PEO could be a great option. In addition to a reduced administrative burden, a PEO can help you scale up quickly, growing your workforce while still giving you time to focus on important tasks like product development and new markets. Similarly, more established small businesses will benefit from decreased employee turnover and higher employee satisfaction.

PEOs can also help small businesses manage a complex workforce. For example, if you have part-time workers or remote employees in other states, a PEO can help you streamline payroll and benefits administration. With improved buying power and cost savings, PEOs provide small businesses a strong ROI and long-term growth.

How to Choose the Right PEO for Your Small Business

So you’ve decided to partner with a PEO. Now, how do you go about selecting the right PEO for your business? Here are a few key details to keep in mind when evaluating a PEO.

Accreditation and Experience

While PEOs are not required to have additional accreditation, working with an accredited provider ensures a high-quality standard. For example, Ethan Allen is an IRS-certified professional employer organization or CPEO. This means critical HR processes like payroll and taxes are protected by strict regulations and safeguards. CPEOs are also responsible for paying employment tax on wages, reducing the liability for small businesses.

In addition to accreditation, it’s important to work with an experienced PEO who specializes in partnering with small or medium sized businesses. Smaller companies will have different needs and goals than large corporations and hiring a PEO that aligns with your business is crucial.

Local Knowledge and a Track Record of Success

Employment rules and regulations vary by state, so when it comes to choosing a PEO partner, it’s important to make sure they have the local knowledge necessary to support your business. At Ethan Allen, we’ve been working in the Hudson Valley for more than 50 years and we have the expertise, agility, and network necessary to provide the strategic HR services and workforce solutions our clients need.

We also have a proven record of success. Guided by our core values, we’re committed to making a lasting difference for our community and the many small businesses we serve.

Want to learn more about what a PEO can do for your small business?

Contact Ethan Allen