3 Reasons Startups Love Their PEO


3 Reasons Startups Love Their PEO


Valentine’s Day can bring out the passion in anyone this time of year. Some even create their own company from a lifelong passion, something many people dream about. When that dream finally gets off the ground, the last things many startup founders have the time to worry about are the day-to-day administrative tasks and issues that can take focus away from the founding mission.

But, like any business, employees still need to get paid. They still need their benefits, and taxes still have to be filed. For this reason, many startup companies partner (or, should partner) with a Professional Employer Organization (PEO) and enter into a co-employment relationship that enables access to a fully staffed, expert HR department and superior employee benefit programs on a large company platform. This way, startup founders can still maintain control of daily operations and managing employees, but someone else absorbs liability and HR administrative functions.

Here are a few other reasons startup companies are loving their PEO this Valentine’s Day.

PEOs ease the burden of regulatory compliance
When given a choice, who wouldn’t choose to avoid the burden of multiple vendors, technology platforms, skyrocketing healthcare costs and unknown employer liability? A PEO’s job is to help businesses focus on what they do best. By working with a PEO, small startups can receive big-business benefits like health insurance, 401(k) plans and other benefits they otherwise would not receive as employees of a small company.

As a company grows, so does the risk for liability. The recruiting, firing, and promoting process, and even paying employees can have significant consequences under the law. Should an organization choose to cut HR-related compliance checkpoints out of their strategy, company leaders could face some expensive legal consequences. Being able to lean on the PEO relationship for compliance advice will save money and eliminate the burden of worry in the long run.

PEOs can save time
One of the biggest resources startup companies lack during the early days is time. Since there aren’t enough financial resources to hire a person for every position, most employees are juggling multiple job functions at once. Working smarter means improving the overall efficiency and effectiveness of business operations, but basic, critical needs have to be met, including: payroll, controlling health insurance costs and other HR tasks.

Businesses, both large and small, are constantly on the lookout for employee skills testing, management training programs, regulatory compliance and risk management programs. It’s a lot to handle and requires in-depth resources, knowledge and time that are hard to come by. WorkSmart Systems is a turnkey, cost-effective solution that will help keep a business running smoothly, and could be the answer to many problems.

This is the point at which most companies opt to outsource HR functions to a PEO to gain more flexibility and not worry about honing the skills needed to perform everyday functions or lose sleep over how to comply with vital regulations. This can ensure good management of the most valuable company asset—the employees.

PEOs enable quicker scaling
Ultimately, a startup founder just wants to grow their dream from an idea into a functioning, profitable business. PEOs allow small businesses to improve productivity and profitability, to focus on their core mission and grow at a steady pace. According to a study by economists Laurie Bassi and Dan McMurrer, small businesses that use PEOs grow 7 to 9 percent faster, have 10 to 14 percent lower employee turnover, and are 50 percent less likely to go out of business.

By their very nature, startups are intensely goal-oriented. People build and join a startup to change the world. They don’t need an HR department to lead strategy and train people on company goals because everyone works so closely together that they know what the expectations are. Back-office HR functions are still crucial to a startup’s success, and partnering with a PEO takes care of that aspect of your business so you can remain laser focused on your goals.

Do you have a growing business in need of an HR partner? Learn more about what a PEO like WorkSmart can do for you!

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