[aa_subtitle_display]Not all PEOs are created equal. They offer different services, they may specialize in different areas or industries, and some may be a safer choice than others. It is important to verify not only that a PEO can meet your business’ needs, but also that it is a reliable, legal business partner.
Most importantly, the PEO you choose needs to fit your needs, providing all of the services you’re looking for at an affordable price. It can be difficult to compare different PEOs since there is no standard way to present their services and pricing, so there is no way to quickly know which one will present a better deal. Work with a PEO advisor to make everything clearer: the advisor can help you to define your company’s needs and will find PEOs that match them. The advisor will present their findings on three to five PEOs, making it easier to compare. You’ll need to make sure that the PEOs offer the benefits you and your employees need. You’ll also need to know what range of benefits they offer and how benefits are funded. If it’s fully insured, you should know which carriers they use and if it’s self-funded, you should find out if a third-party administrator (TPA) is used. You’ll also need to ask if the carrier or TPA can legally do business in your state.
Your PEO needs to know your area, both your geographic area and your industry. Look for PEOs that work with companies in your area and your field. If the PEO doesn’t offer references on their website, ask for some so you can verify that their customers are pleased with the service. If expansion into different states is in your company’s future, ask prospective PEOs if they work exclusively with a state-specific health insurance provider, or if they have other networks to work with.
Make sure that the PEO is financially stable. If a PEO is publicly traded, their statements should be easily accessible. You may be able to ask for a quarterly financial statement or an annual audit by an independent CPA. If they are a private company (as most PEOs are,) they should give you an independent CPA’s verification of their audited financial statements and that they’ve paid taxes and benefits. They should have a current Statement on Standards for Attestation Engagements No. 16 audit, which is an auditing standard for service providers, which looks at controls in place (financial and otherwise.)
Accreditations are a sign of a quality PEO. Entrepreneur recommends looking for a PEO that is accredited by Employer Services Assurance Corporation. There is also a Workers’ Compensation Risk Management Certification that ensures a PEO’s risk management tactics are good. Your state may require licensing for PEOs; if so, make sure that they are licensed.
It’s important to know who you are working with, so ask about the PEO’s customer service. You can ask about their “staff support ratio,” which is the number of corporate staff members compared to the number of their clients’ employees. You can also ask if the PEO uses a call center or if your company will have a dedicated support team. It is also important to note that some PEOs will charge extra for asking to speak to a live customer support staff member, so ask about it upfront.
Partnering with a PEO is a big decision, so it makes sense to work with a PEO advisor to make the choice a little bit easier. Completing your due diligence now will pay off for years to come as you benefit from all the perks from a great PEO.