What You Need To Know About PEO

Have you always wanted to hire someone for a full-time role but can’t because they live in another country? Thinking of outsourcing your employees but don’t know where to start?


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If you’re trapped between these kinds of dilemma, then you must have already considered contacting a PEO, or a Professional Employer Organization.

The phrase seems to be self-explanatory, but there’s more to PEO than meets your eyes.

Here’s what it is truly like.

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PEO and Employee Leasing

Here’s a myth buster: PEOs and staffing firms are not the same. Staffing firms are known for leasing employees, but a PEO goes beyond that.

Aside from leasing employees, most PEOs offer a “co-employment” type of relationship with their clients. This means that the client (in this case, you) and the PEO have a shared responsibility in taking care of the employees’ administrative and HR concerns.

This is particularly applicable when you already have existing employee/s that are outsourced but you still don’t have a corporate entity that legally operates in their area. A relationship with a PEO will save you a lot of money and trouble, removing the need to register your business, pay for operational costs, and do all the paper work in between.

Moreover, your PEO will handle all the legal compliance requirements to make the employment smooth as they work with you.

If you otherwise want contractual work and need a lot of people in a short time, you can take advantage of employee leasing. PEOs are able to offer you a competitive rate for healthcare and compensation because they can combine the employees of all their clients giving them access for a more affordable rate.

Companies who outsource their administrative or customer service jobs mostly lease their employees from PEOs.

PEO and Small Businesses

PEOs present a very convenient way of expanding your workforce abroad. Outsourcing jobs are very common nowadays, and PEOs can bridge that gap between you and your future employees.

Here are a few reasons why a small business owner would benefit from a PEO:

  1. Better Employee Retention.

One reason why good employees leave is the lack of security and legal benefits. Small business owners often hire full time employees painstakingly, yet lose them because they are unable to compete with local employers who can provide legally compliant employee benefits.

With a PEO partnership, small businesses will be able to create long-term relationships with their employees without stressing over the legalities of it all.

PEOs are expected to have expert HR and accounting services that can handle all the nitty-gritty parts, so you can focus on your business.

  1. Controlled Operational Costs.

Nothing feels better than being on top of your bills, especially on operational costs. As much as possible, small business owners would want to spend less on operational costs (abroad) than on their actual employees.

With a PEO, you’ll no longer need to rent a personal office or acquire a business permit. Everything will have been accounted for on your first contract and so there’s a lesser chance for financial disasters and surprises.

  1. Reduced Legal and Accounting Costs.

As mentioned earlier, you will no longer take care of the paper work nor deal with the red tape when you work with a PEO.

And if taxes are a headache to you, it is also to every single employee. Save yourself the trouble of computing taxes or dealing with payroll and insurances. PEOs have Accounting and Payroll experts and your employees will be provided a contract that is fully compliant to local laws.

A few agencies even offer your hired employees a contract of employment in dual language, ensuring that everything is properly understood and legal duties are carried out by both parties.

  1. Reliable HR, Payroll, and Settlement Support.

Local employment laws can vary greatly per country, if you have a multi-national team living across different countries, it wouldn’t be possible for your own in-house HR team to handle all the legal requirements efficiently.

Working with a PEO will give a reliable access to expert advice about local employment laws. The last thing you want to see is a lawsuit against you or your company, so being aware and compliant to the law should be your highest priority.

Getting a PEO is going to solve just that.

Which PEO is right for your business?

There are a lot of PEOs out there and sometimes, merely googling them is overwhelming. Getting into a PEO partnership is as vital as hiring the right employee. Make sure that your PEO ticks the following boxes in the right places:

  • References. Nothing’s more reliable than a professional recommendation.
  • Competence. How long have they been in the business? What’s their area of expertise?
  • License. You surely can’t trust someone to do the legal aspects of your business if they’re not legally operating themselves.
  • Contract agreements. Review your contract, and be informed about the given provisions.

With a PEO partnership, you can finally indulge on your much-needed Caribbean holiday stress-free.

About the Author

Ankur Shah
Ankur Shah is the founder of the Value Investing India Report, a leading independent, value oriented journal of the Indian financial markets. Ankur has more than eight years of equity research experience covering emerging markets, with a focus on India and South East Asia. He has worked as both a buy-side investment analyst for a global long/short equity hedge fund and a sell-side analyst for an emerging markets investment bank. Ankur is a graduate of Harvard Business School. You can learn more about his latest views on global markets at the Value Investing India Report. -- He can be emailed at AnkurShah47@gmail.com