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HOUSTON BUSINESS REVIEW

What is a PEO?, Should Your Business Consider Employee Leasing as an Option? What Are The Advantages?
By Mike Alexander Sr.

Mike is involved with several organizations including the National Association of Health Underwriters, Independent Insurance Agents Association, East End Chamber of Commerce, Better Business Bureau and the National Association of Small Business Owners, to name a few. Mike is a licensed Risk Manager and highly regarded in the insurance industry.

For more information on ABM and Mike Alexander, visit their site here.

I get asked many times by some prospective clients, if they should consider a PEO ( a Professional Employer Organization) and employee leasing as an option for their business, and what is the cost of the service with a PEO.

A small business has to deal with a lot of issues, Unemployment claims, workers comp claims, payroll and benefit administration, Safety programs, Cobra, and keeping up with all the government regulations. For some Small businesses, this can be overwhelming, and the services of a PEO could allow the small business owner to focus on growing his business and not keeping up with mounting paperwork and employee issues. A PEO may be the right fit for many small business owners.

What is a PEO??
A PEO is a Professional Employer Organization, when a company uses a PEO, they transfer all of their employees to the PEO, so the employees become employees of the PEO company, who in turn leases them back to the business owner. The PEO handles all the tax liability, workers comp, HR services and employee benefit administration for the business, so in essence, the employees are employees of the PEO for all administrative purposes, the business owner, still hires, fires and controls the employee for job duties, In Texas the arrangement is a co-employer doctrine.

In most cases, the Business saves time by giving up the adminstrative headaches in dealing with employees and allows him more time to promote and grow his business.

What does a PEO charge ??
Most PEO's charge a percent of payroll for their fees. The average is between 3 to 6% of gross payroll. for providing these services, Some PEO's charge a fixed price or a per head charge per employee. Find out up front what the fee is, so that you will not be surprised on the first billing. Some PEO have Adminstrative Services Only contracts, in which they perform all of the HR and benefit services, but you still are the sole employer and not a co-employer. This service charge is usually less, but you do not gain any protection from liability as with a co employer contract. Just be sure you have reviewed all the contracts to be sure it is what you want.

What size of business does a PEO accept ?"?
Some PEO's require a minimum payroll amount or a min # of employees for a business to be able to sign up for the services. I have One PEO in general who will enroll one or more employees. You will be able to offer benefits and other services to your employees like the big companies do.

The best fit for an business owner would be one who has between 2 to 50 employees , or a business that has High turnover. Anew start up business could also benefit from the services of a PEO.

If you would like more information about PEO's in the Houston area, please contact Me at 281-448-3040 and I would be happy to provide you with a list of the PEO's in your area, and the services that they provide or visit our web site at www.abminsuranceservices.com and request a PEO quote.