Professional Employer Organizations - An Overview

Businesses today need help managing increasingly complicated employee matters such as health benefits, workers compensation claims, payroll, payroll taxes, and unemployment claims.

Contracting with a Professional Employer Organization, (PEO), can be extremely helpful to businesses in these matters. With a co-employment contract, for example, the Professional Employer Organization, (PEO), actually becomes the employer-of-record for most purposes, including insurance and taxes, and files the paperwork necessary using its own employer identification numbers. The client organization then continues to manage and direct the employees daily activities.

Professional employer organizations (PEOs) enable clients to cost-effectively outsource the management of human resources, employee benefits, payroll and workers compensation. PEO clients focus on what theyre good at to grow their bottom line.

A Professional employer organization provides integrated services to manage important human resource responsibilities as well as employer risks for their client organizations. A PEO delivers these services by establishing and maintaining an employer relationship with the employees at the clients office and by contractually assumes certain specific employer responsibilities, rights, and risks.

A Professional Employer Organization earns its income partly by using different methods of wage, insurance and tax arbitrage. With insurance products, a Professional Employer Organization will purchase workers compensation, employment practices liability and employee benefits insurance at an established price. The Professional Employer Organization then adds a markup to the premium costs and then bills the updated rate to the client. This new rate would still be less than what the client company would have paid on its own.

The client organization benefits since Professional Employer Organizations saves time and staff who would otherwise be used to perform tasks like preparing payroll, administering benefit plans and more. Additionally, it will most likely reduce legal liabilities and/or obligations to employees that it would otherwise have. The client organization may also be able to offer a better package of benefits, and so be in a position to attract better skilled employees.

So the Professional Employer Organization model can be very attractive to small and mid-sized businesses and associations. Professional Employer Organization marketing is typically directed toward these segments.

Form more information on Professional Employer Organizations go to PEO Texas or Professional Employer Organizations