One major reason is costs savings. PEO consultants has helped companies find PEOs that saved our clients up to 40% on their annual health insurance premiums due to the economies of scale of the PEO. Each of the PEOs that we work with have their own master health insurance policy with their own premiums. These are not available to you in the open market. The PEO can offer reduced health insurance premiums because they have hundreds of companies bundled into one large company and with that buying power they can offer reduced premiums over a company with 10 or 50 or even 300 employees.
Partnering with a PEO also allows you to focus on the core competencies of your company so that it can grow and flourish. Using a PEO helps businesses grow on average 9% faster than companies who do not. Your time, energy, and focus is centered on the growth of your business, and as your business grows, so will your needs for an HR department. However, the necessary resources for HR, payroll, benefits management, regulatory compliance, risk management, insurance and employee benefits programs) are both timely and costly. Your PEO acts a co-employer in order to assume most of these responsibilities, as well as employee liability. Your company retains the responsibilities directly related to operations, sales, and production.