What Does a PEO Company Do?

PEO One Point Professional Employer Organization

The acronym PEO stands for professional employer organization and it is used to refer to an organization that forms a joint employer relationship with another organization to which it leases employees to the partner employer. The special profile of PEO companies allows employers to outsource their HR functions, such as payroll administration and the calculation of employment-related taxes. The client company will also use the PEO’s federal employer identification number to report wages and the PEO will bear employee liability.

A PEO company can assume many different roles that they take over from the client company’s HR department. Some of the most common tasks assumed include the processes related to recruitment, the processing of payroll data, the administration of the amounts and activities related to unemployment, the organization of drug testing programs for companies the activities of which require such testing and the administration of worker’s compensations.

The decision to outsource the types off tasks mentioned above can bring lots of benefits to small businesses as well as to large companies. Some of the most important perks of partnering with a PEO include freeing up energy and time on the side of the client company due to not having to engage in such energy and time intensive processes and increased compliance with applicable laws and best practices.