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Can my company benefit from using a PEO? What should I consider?

2 min read


The Young Entrepreneur Council is an invite-only organization comprised of the world’s most promising young entrepreneurs. YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

Q. Can my company benefit from using a PEO (professional employer organization)? Name one factor I should take into consideration.

1. Number of employees

Growing companies should look at the PEO option. They have served me well through many companies. Eventually, you will outgrow a PEO simply because you pay a fee based on either headcount or salary distributed. At some point, the cost will become large enough that you can afford a salaried employee to handle these administrative tasks for a smaller cost. — John Jackovin, Bawte

2. Need for experts to take over

As an entrepreneur, you have more than enough to worry about. Partnering with a PEO removes many of the tedious tasks and to-dos that come with employing people. From approving vacation requests to making sure annual raises are in line with industry standards, PEOs free up more of your time to work on the parts of your business that you really enjoy. Experts take care of the rest. — Brittany Hodak, ZinePak

3. Team distribution

Because we run a distributed team, using a PEO makes a ton of sense. They handle all the regulatory and logistical hassles of having teammates in multiple states. That lets me focus my time on other more valuable opportunities. — Wade Foster, Zapier

4. Company growth

We have looked into using a PEO for our employee management tasks. As our company grows, I think it will become a necessity to manage HR, employee benefits, payroll, workers’ compensation, recruiting, safety management, training and development. — Phil Laboon, Clear Sky SEO

5. Experience in PEO-related tasks

A great PEO will make you competitive with bigger companies in attracting and retaining talent and allow you to focus your energy on building your business. Unless you have lots of experience in tax accounting and labor law, you’re better off outsourcing this part of the business from the start. — Mary Ellen Slayter, Reputation Capital

6. Size of internal bandwidth

We see several benefits to managing benefits and HR in-house. However, PEOs can be helpful when there is not enough internal bandwidth. — Jesse Pujji, Ampush