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While We Talk A Lot About PEOs, You May Be Asking, “What Is A PEO?” 

A PEO is a professional employer organization, delivering comprehensive human resources services to clients who find advantage in partnering for HR expertise at a more affordable cost. The purpose of a PEO is to provide comprehensive HR solutions and support. PEOs are accountable for paying wages and taxes, providing compliance with state and federal laws and regulations, supporting employees with access to 401(k) plans, health, dental, and life insurance, dependent care, and other benefits that may otherwise be cost prohibitive. Partnering with a PEO let’s an organization focus on core business activities while the PEO focuses on human resources. 

Almost four million people are co-employed by PEOs across the United States. PEOs usually provide payroll, benefits, HR administration, risk and compliance, and other HR services, so that small and mid-size businesses can offer the same employee experience of bigger businesses. This shared responsibility for employees helps businesses improve productivity, increase profitability, and build a better organizational culture while the PEO focuses on supporting the HR needs of employees to improve hiring, retention, and employee satisfaction.

What Are The Benefits Of A PEO?

According to a recent survey of companies conducted by NAPEO, the National Association of Professional Employer Organizations, the benefits of a PEO are even more important today than ever. Companies focused on economic and financial concerns, business growth and success concerns, and government regulations are finding the support they need by partnering with a PEO.

  • 98% of business owners who use a PEO would recommend it to a business colleague
  • Average annual return on investment from using a PEO is 27.2%
  • Expected annual median revenue growth for PEO clients is 40% greater than that of comparable non-PEO firms
  • PEO clients are 16% more likely to report an increase in profitability compared to small businesses not using a PEO
  • PEO clients are 91% less likely to be temporarily closed and 60% less likely to be permanently closed due to the COVID-19 pandemic
  • PEO clients grow 7-9% faster than other comparable small businesses that do not use a PEO

Source: 2020 NAPEO Market Research Tracking Survey, December 2020