Need an HR Department But Can’t Justify the Costs?

If you’re a small to medium-sized business (SMB), you likely recognize the importance of having professional HR management to handle administrative tasks while keeping your employees satisfied with competitive benefits. Offering big-business advantages like comprehensive health insurance, 401(k) plans, and other perks can enhance employee retention and attract top talent.

However, you might find yourself in a catch-22: your business is too small to afford a full-fledged HR department, yet you struggle to grow without these essential HR resources.

Fortunately, there’s a viable solution: hiring a Professional Employer Organization (PEO). A PEO allows you to offer your employees access to top-tier benefits that would otherwise be unattainable for your business. A number of Lumiere’s clients have discovered that partnering with a PEO is a cost-effective way to provide excellent employee benefits and HR support. PEOs can manage your payroll, benefits, HR administration, tax compliance, and regulatory obligations.

How Does a PEO Work?

When you engage a PEO, you and the PEO become co-employers. Responsibilities are clearly defined in a contract that outlines both parties' obligations. This partnership enables you to streamline HR processes, allowing your finance and management teams to focus on productivity and profitability.

Partnering with a PEO can lead to significant advantages for small and medium-sized businesses. According to recent studies, companies using PEOs experience 7% to 9% faster growth, 10% to 14% lower employee turnover, and are 50% less likely to go out of business. Access to improved benefits options can help you attract and retain top talent by providing employees with choices from well-known national insurance carriers.

PEOs typically charge either a flat fee per employee per month or a percentage of the total payroll. In ideal scenarios, savings from healthcare premiums and reduced payroll and HR costs can offset the PEO fees, making it a financially viable option.

What Are the Benefits of a PEO?

In addition to enabling you to offer competitive health insurance, here are some additional benefits provided by a PEO:

• Comprehensive Payroll and HR Administration: Efficient management of payroll, benefits, and compliance tasks.

• Employee Onboarding: Streamlined processes for new hires to ensure they integrate smoothly into your organization.

• Benefits Enrollment: Assistance with employee benefits selection and enrollment.

• Tax Remitting and Filing: Accurate management of tax obligations to avoid penalties.

• Enhanced Competitive Benefits: Offering high-quality benefits that are often beyond the reach of smaller businesses.

• Retirement Plans: Access to 401(k) plans and other retirement savings options.

• Flexible Spending Accounts: Health savings options to increase employees' take-home pay.

• COBRA Administration: Compliance management for COBRA benefits.

• Government Compliance Support: Minimizing risks associated with regulatory compliance without adding to your workforce.

• Workers’ Compensation and Employment Practices Liability Insurance (EPLI): Coverage to protect your business and employees.

• Affordable Care Act (ACA) Support: Assistance with ACA compliance and reporting.

• Professional HR Guidance: Expert advice to navigate complex HR challenges.

Is a PEO the Right Choice for You?

If you’re considering whether a PEO is the right fit, start by clarifying your needs regarding HR administration, risk management, and the benefits you want to offer. Here are some steps to take:

1. Evaluate PEO Offerings: Investigate what each PEO provides and how it aligns with your business needs.

2. Ask Questions: Inquire about how benefits are funded and managed.

3. Understand Pricing Models: Make sure you comprehend the costs based on your current size and projected growth.

4. Review Client Portfolios: Look for PEOs with expertise in your industry.

5. Request References: Speak to other businesses that have partnered with the PEO.

Let Us Help You

If you believe a PEO could benefit your business, you’re likely on the right track. As you begin your research into PEOs, consider keeping us in the loop. At Lumiere, we do not sell PEO services, allowing us to provide independent advice tailored to your needs.

We have experience working with many major PEOs, including:

• ADP TotalSource: A leader in the PEO market, ADP offers a familiar platform with extensive resources. Their pricing is a flat fee per employee.

• TriNet: A technology-driven payroll and HR solution that specializes in supporting specific industries. Their pricing is also a flat fee per employee.

• Insperity: Provides a full-service HR solution managed by professionals, along with Human Capital Management software. Their pricing is based on a percentage of gross payroll.

• Justworks: A newer, tech-focused solution offering intuitive mobile and web interfaces, with live chat support and competitive flat fees per employee.

For additional recommendations, check out resources from the National Association of Professional Employer Organizations (NAPEO).

Once you choose a PEO, you’ll find that most offer user-friendly technology that can be easily integrated into your existing systems. However, if you encounter challenges during the transition, Lumiere is here to assist you in optimizing your new PEO services. We’re committed to supporting your financial and HR needs.