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disadvantages of using a peo


Invoices can be difficult to understand with payroll, taxes, workers’ comp, ELPI, and their administrative fee often lumped together as a “package.”. Here, we’ll discuss the disadvantages of using a PEO, along with the associated costs of a PEO. This lack of objectivity can result in some serious morale and legal problems if all employees are not treated fairly or all the same. Many startups and small to mid-sized companies rely on a PEO to take care of the human resource duties that so often bog down owners and company managers. Does the PEO make a commitment as to how many hours per week they will offer support to your business? As you might imagine, there are both pros and cons in hiring a PEO. How often does this happen? Instead of treating the PEO as a resource, many in-house HCM staffs consider the vendor a usurper of their power and their use. PEO pricing can be subjective and negotiable, making it difficult to know what is a fair price. Do they provide a dedicated contact for your business?

Here are some questions to ask when deciding if a PEO company is right for you.
It is a rare business owner who does not struggle to some extent with giving up a portion of control within their company. While a PEO may seem like the perfect solution to HR struggles experienced by startups, there’s actually some serious disadvantages upon closer examination. For more detail about managing healthcare reform, download our white paper here. Disclaimer | Contact Us | Privacy Policy, How to Deal With Difficult Employees: 10 Disruptive Behaviors & How to Manage Them, What New COVID-19 Legislation Means for your Small Business, COVID-19 Real World Questions from PEO Clients & Partners, Performance Management Tips for Small Businesses. However, the PEO will provide strict policy to enforce compliance and the business owner needs to follow orders as instructed to remove himself from any liability. PEOs support a large number of employees, which is what gives them the ability to offer affordable insurance plans and benefits that a small business might otherwise be unable to offer their employees – but it’s also what makes it more difficult to get immediate attention when it’s needed. MidwestHR continually collaborates with clients to understand and address any concerns so we can offer the best possible solutions. Do they itemize their invoice? Will your business have any input in such a scenario? Required fields are marked *. If a PEO does not properly evaluate the needs of a company – now and for the future – they may not be in a position to meet your accounting demands as your business grows. In addition, the HR team may negatively influence the business owner's decisions and cause them to prematurely dismiss the PEO. Which Legal Structure for Your New Business?

PEOs can avoid this issue by utilizing systems and software that are compartmentalized, customizable and expandable. But, isn’t that the point, keeping you in compliance and lowering your risk? But, when a business grows to over 100 employees, the costs of maintaining employees actually decreases, yet PEO fees do not. Much of a startup’s success is dependent on its ability to be flexible and make spur-of-the-moment changes and decisions.

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