Professional Employer Organizations, or PEOs for short, are becoming increasingly popular thanks to their ability to help businesses navigate international business dealings. According to Bradford Jacobs, Global PEO services are especially effective at handling payroll services. Read on to find out more about PEOs and how your business can benefit from them.
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What is a PEO?
PEO is short for a professional employer organization, and it acts as a co-employer. PEOs are designed to handle HR outsourcing services that include payroll and benefits on behalf of the client company. PEOs are a great way to outsource benefits costs for your organization, and they can unburden your HR resources and administration if you’re a small to medium enterprise.
Most PEOs are made up of seasoned executives that are experienced in accounting, client services, tax, legal, and HR matters. Not only that, but a PEO typically offers other conventional business functions such as sales, marketing, business development, and IT.
What about global PEOs?
A global PEO acts as an employer, typically of an international employee. This means SME enterprises can place their employees under the payroll of a global PEO while the client company keeps track of the employees’ work. The great thing about working with a PEO is that it allows you to outsource a large aspect of your business’ key admin tasks, including tax infrastructure, legal and HR compliance.
Benefits of working with a PEO
Here are some of the benefits of working with a global PEO:
- You don’t have to worry about interpreting the different benefit and HR laws of the various countries you operate in.
- The PEO takes care of international terminations, which can be quite difficult for U.S. based HR teams.
- A PEO can manage payroll related issues such as on-time payments, direct deposits, and tax contributions.
- They’ll also manage location-specific benefits such as vision, dental, and medical. This is in addition to sick time, PTO, flex spending, 401k benefits, and even commuter benefits.
- A PEO will scrutinize and interpret the labor laws of any and every territory you choose to operate from. This will ensure that your business complies with national, state, and local regulations.
- A PEO will also organize short and long term employee requests such as disability benefits, termination pay, FMLA, performance management, and worker’s compensation.
In a nutshell, PEOs handle pretty much all of your company’s international HR functions, so you don’t have to. You can outsource the whole gamut of your company’s HR accounting and even legal structure to the PEO.
PEOs are so thorough that they’re willing to take on compliance risk on your behalf and they’ll make it that much easier for your company to hire new employees from different regions around the world.
Source: Fit Small Business
Who can benefit from a PEO?
A PEO is particularly beneficial for small to medium enterprises because it’ll take care of all the company’s administrative, legal, finance, and HR tasks. Most companies aren’t equipped to handle all of these different functions, especially when expanding to international territories. PEOs specialize in these and other tasks. Plus, it’ll cost you less to appoint a PEO instead of hiring employees in every country your business expands to.
Common questions about PEOs
- Can a PEO hire employees on behalf of my business?
Not necessarily. A PEO can only manage the onboarding process after you’ve hired an employee.
- Is it better to hire an in-country contractor?
Hiring an in-country contractor over a PEO is a risky endeavor. That’s because there’s no telling if the contractor you’ve hired is legally recognized and you could find yourself in a legal quandary if the government discovers that you’re working with an illegal contractor. This could lead to hefty fines and even criminal charges.
- What happens when an employee leaves?
The employee contract should have a notice period included just in case an employee quits.
- What happens when I need to fire an employee?
Terminating an employment contract can be tricky when you’re dealing with international regulations. That’s because every country has its own unique laws around international employee termination. This is where the expertise of a PEO comes in.
