Businesses often ponder whether or not to hire a Professional Employer Organization (PEO) and sometimes feel hesitant to explore this option though engaging a PEO can have many beneficial advantages.
A PEO is an organisation that manages the employment and human resources (HR) functions of the employees such as 1) Payroll and tax filing, 2) Benefits administration, 3) Compliance, 4) Talent management, 5) Human resource support on behalf of its clients. A PEO can act as the Employer of Record (EOR) and/or Co-employer as the case may be depending on the contractual agreement. Although it may seem like an additional cost at face value, engaging a PEO can actually reduce cost, mitigate risk and save time.
More and more businesses are choosing to engage a PEO when establishing a small to medium size business operation in a foreign country. International PEO outsourcing is growing and for good reason. Here are three notable advantages of hiring a PEO to help your business achieve its growth potential:
Reduced Overall Costs, More Efficient Expenditure
Contrary to misconceptions, PEOs can actually be cost-effective for your business. The costs involved when working with a PEO such as administering payroll and benefits are typically lower than those of a subsidiary. As the PEO will handle all compliance-related matters, your business can save time and money by not having to engage with separate lawyers or tax advisors. If a business can make a strategic move that can help reduce operational costs whilst not compromising on quality – they shouldn’t hesitate to make that change.
By mitigating non-compliance risk through a PEO helps minimize contingent liabilities & incidental costs due to potential lawsuits, legal expenses or PR fallouts. Moreover, PEOs can help increase profits of a business as smoother employee relations can increase employee satisfaction. The happier your employees are, the better their productivity will be which is better for business!
You Don’t Have To Worry About Compliance
Employment and compliance laws are constantly changing. This makes it difficult for businesses to keep track of new developments whilst managing all of their other business operations. Often there is little to no leeway given for issues of noncompliance and businesses can be affected harshly with disruptions to their operations and legal fines.
PEOs stay up-to-date with employment regulations & legal requirements and ensure regulatory compliance. They proactively keep their clients informed of regulatory changes. A PEO can put your business at an advantage by ensuring that it stays compliant with changing regulations and laws, especially when managing offshore operations.
Spend More Time On Your Business
Hiring a PEO will keep your focus sharpened on more important aspects of your business. The wide variety of administrative details involved when overseeing a workforce can be tiresome and overwhelming when juggling daily responsibilities. But working with a PEO will provide you with the required time to dedicate your hours, energy and resources to core operations.
PEO takes on the role of a HR department and carries out services such as recruitment, managing payroll, compliance policies, administering benefits, keeping track of employee records, and more. By essentially outsourcing the HR and employment services of your business, you can now cater to other areas such as product development, promoting services, financial planning and community engagement.
