What is a PEO and How Does it Work?
What is a PEO?
PEO, short for Professional Employer Organization helps a client company in managing payroll of its employees. A PEO also takes care of compliance and HR responsibilities for the organization. Also known as a co-employer across the US, a PEO consists of people experienced in human resource, legal domains, taxation, client servicing and accounting. The benefits of hiring a PEO can span horizons. From reducing the cost of administration servicing to managing payroll complexities, a PEO empowers businesses to grow at scale. Other than these, a PEO can help businesses expand worldwide without the constraint of setting up an entity in different countries.
A Professional Employer Organization guides the client companies to steer through the process of affordably hiring remote talent from across the country. Adhering to the local hiring laws of the state you are hiring from, a PEO acts as the catalyst of the system. Other than this, a PEO can also take care of insurances and health benefits for your remote employees and contractors.
How does PEO work?
A Professional Employer Organization or PEO hires the employee for the client company on its own payroll. Once equipped, the employee becomes ‘employer on record’ for the PEO company. From here on, the employee receives daily KRAs from the client company but works under the PEO’s HR guidelines. The PEO takes care of the employee’s payroll and compliance while the client company can focus on their business needs.
A Professional Employer Organization can handle the following things for your organization:
PEOs contribute to numerous payroll-related tasks such as calculating tax deductions, making salary deposits and maintaining payment records for your employees.
- Employee Benefits
PEOs work with local insurance providers and companies to provide benefits such as health care, commute and workplace benefits, flex spendings and sick leaves.
- Human Resource and Legal formalities
PEOs are equipped to do thorough research on local hiring laws for a client company. Because of their agile nature, these PEOs can mould according to the ever-changing laws and legalities. This helps you in avoiding the hassle and staying updated according to the market trends.
- Added benefits
Apart from the usual HR and admin responsibilities, a PEO can also help your company in numerous ways. This includes managing performance-based compensations for your employees, managing long and short term disability pay and overtime expenses.
Do you need a PEO for your company?
Professional Employer Organizations are formed to equip small and medium businesses with the power of streamlined HR and admin practices. Outsourcing a PEO can help you gain more focus on your core business acumen and product. Especially if yours is an incubating business trying to stretch its arms to gain client power, a PEO can change the course of your business success.
Reducing the expenses involved in hiring an HR team, a PEO saves cost in everything from avoiding any wrong paper filing to calculating proper tax invoices. But what about large organizations? Or, what if you want to hire remote employees in a different country but don’t have the expertise to do so?
Can PEOs help if you want to hire overseas?
Generally speaking, a PEO can help you in all your HR and payroll needs when hiring within the country limits. But what if you want to expand your horizons and hire from across the globe?
For such instances, a Global PEO can help.
What is Global PEO?
Just like any other Professional Employer Organization, a Global PEO functions in identical format. The only difference a global PEO has is that it can help you hire globally. A global PEO charts the global hiring laws for you and helps you expand your base with global talent. Calculating taxation, policies and regulations in the country you want to expand to, global PEO structures your admin needs in a productive format. The importance of a global PEO comes into play when you want to blur out the physical constraints of hiring employees across borders and cultures.
Benefits of working with a Global PEO
Automation plays a crucial role in the expansion of your business capabilities. A Global Professional Employer Organization can help you with benefits such as:
- Helps your company to the local hiring laws worldwide
Hiring the top talent from across the globe comes with its own complexities. In the ever-evolving world, a Global PEO helps you in being up to date with the latest hiring trends. Understanding the laws and regulations for the location you want to hire from, a global PEO makes processes and financials accordingly. This helps you in avoiding audits and fines which could incur due to ignoring local hiring laws in a country. These Global PEOs generally have a presence in almost all the countries and are well equipped to understand the anecdotes with the local government.
- Helps your company forecast the finances in time
Understanding the finances before you take your business to a new country can empower you with useful capabilities. Forecasting the amount of money you will need to spend if you hire from a different country is a difficult task. A Global PEO streamlines the process through extensive research and experience, sheltering you from the financial storm. Empowered through data and understanding, these PEOs can suggest the right financial solutions for you when you need them the most.
- Help you keep your company data secure
The expansion of technology has witnessed a steep growth over the years. During this course, data has evolved as one of the most valuable currencies of all times. This makes it extremely important for you to keep your business data secure when working across borders. A Global PEO understands the local complexities involving the data use and suggests changes accordingly. Most countries speak strongly about the RTI their citizens have with respect to the data they give out to a company. You need to be compliant accordingly and address any data breaches possible. A Global PEO takes this responsibility off your hat and keeps you data strong.
- Helps you expand to newer markets with the least hassle
Setting afoot in a new country with your business is not all ‘beaches and sunshine’. Expanding to newer markets carry with it challenges beyond just language barriers and taxes. A Global PEO ensures compliance with the local hiring laws. This in return gives confidence to your remote workforce in working with you. This also makes sure you don’t bite on the finances and pay taxes accordingly. A Global PEO can also help the local government gain confidence in your business over time.
- Helps you offer complimentary benefits to your employees
Benefits such as medical cover including dental care, vision insurance and life cover can bring your company to the good list. A Global PEO can help you in managing all these expenses at the minimum cost giving your employees the benefits in return. This helps your business with better employee satisfaction and retention.
- Helps you make your remote hiring process affordable
Hiring remote talent can cost you thousands of dollars. A Global PEO helps you save this money and invest in core business needs. Providing a well-researched report on how much you should pay to a remote employee in a specific country, a Global PEO equips you with the knowledge and keeps the expenses low.