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Business Planning

PEOs and Your Small Business

When you dreamed of running your own business, you probably never thought much about ADA, EPPA, USERRA, or COBRA. What do these acronyms stand for? ADA is the Americans with Disabilities Act; EPPA, the Employee Polygraph Protection Act; USERRA, the Uniformed Services Employment and Reemployment Rights Act; and COBRA, the Consolidated Omnibus Budget Reconciliation Act. These are among three dozen or so federal laws and regulations—in addition to common law, case law, and state and local laws—that business owners need to comply with as employers.

Complying with complex personnel-related regulations is just one of the many administrative challenges confronting today's business owners, who must also deal with such issues as payroll taxes, workers compensation, employee benefits packages, training, recruitment, etc.

Enter the PEO

Consequently, a growing number of entrepreneurs have introduced their businesses to another acronym: PEO, which stands for Professional Employer Organization. By serving as an off-site human resources department, a PEO provides welcome relief to the frustration many small business owners experience when administrative issues interfere with their ability to focus on their core business—serving customers and growing their companies.

Another important benefit of a PEO is that it can help level the playing field with larger companies in the employee benefits arena. By using the combined purchasing power of thousands of employees, a PEO can provide its clients with top-notch benefits packages that are competitive with those of Fortune 500 companies. This advantage is especially useful in attracting high quality, experienced workers.

All the Help You Can Get

In addition to administrative relief and improved benefits, a top-of-the-line PEO also provides entrepreneurs with other vital employment resources, such as productivity-based training courses in: time management; communication skills; customer service; team building; and total quality management. The result offers advantages for both sides: Employees value the opportunity to grow professionally, while the business benefits from increased productivity.

Perhaps most importantly, a PEO offers business owners the opportunity to reduce their employment liability exposure. With a PEO, a client company can transfer many of its employment liabilities to the PEO, while other liabilities are shared. With those remaining liabilities, the PEO can provide resources such as safety consultants, legal professionals, and human resource specialists to help provide the support needed to further minimize a client company's liability exposure. A full-service PEO can help small business owners handle these and numerous other administrative responsibilities efficiently and effectively.

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