Professional Employer Organization – What Is It?

What Is Professional Employer Organization?

Employees are the main driving force in every company. Without them, the business wouldn’t function and it would be impossible to achieve success and deliver the product to customers. But managing employees, their work, and keeping a hand on all issues related to the company’s situation may take a lot of attention and energy. Thus, it can be difficult to focus on the core mission of the organization. Especially due to all the paperwork.

Here’s where professional employer organization may come in handy. But in order to use its services, it’s necessary to learn what such an organization does. And here’s the definition according to NAPEO (The National Association of Professional Employer Organizations)

Professional employer organizations (PEOs) provide comprehensive HR solutions for small businesses. Payroll, benefits, HR, tax administration, and regulatory compliance assistance are some of the many services PEOs provide to small and mid-sized businesses across the country.

PEO simply helps small businesses in HR-related issues, providing services similar to those of a large company.

Why Use PEO?


The statistics gathered by NAPEO show that using the services of professional employer organization is beneficiary:“Businesses in a PEO arrangement grow 7-9 percent faster, have 10-14 percent lower turnover, and are 50 percent less likely to go out of business.”

Thus, PEO can be especially helpful if you have a small company and need an outside organization to take care of the less (but still) important issues. Thanks to this your business can focus on creating the product or project and fulfilling the customers’ needs instead of doing all the paperwork. Here are some of the main aspects and employee benefits of leading a company which can be taken care of and provided by PEO:

  • insurance coverage at a lower cost,
  • payroll and tax administration,
  • no need for hiring HR professionals,
  • ability to monitor company’s progress,
  • your team can focus solely on their tasks,
  • risk management.

This can help you become more productive and focus on the long-distance goal of your business. Also, your employees can do their tasks and projects without the need for multitasking and performing various duties which are not in their scope of work.



Of course, professional employer organization may have its disadvantages. So before you decide to use PEO, make sure to check if it is the right service for your business. Understand how it works, if it will bring benefits to your company and employees. And make sure to check if the PEO business you want to use has certifications and is trusted by customers. Choosing the PEO requires deep analysis of your organization’s needs but also to set up your expectations.

Professional Employer Organization – What Is It?

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