Finances & Money

5 Tips for Hiring a PEO Service for Your Small Business

If you simply find yourself without time or energy to work on building a HR department then you definitely need a PEO service. What is a PEO? A PEO is a professional employer organization. These companies specialize in administrative duties and legal compliance as their profession.

There are many rules, laws and best practices to abide by and it can be difficult figuring out how to move forward legally and professionally without a little help. Whatever the case may be for why you need help, if you need to find the best PEO companies to work with then follow the tips below.

#1 – Look Under the Hood

Don’t simply pay attention to a fancy website, you need to see what they have working for them and why you should choose their company.

In this highly regulated industry, you need to make sure that you are choosing a PEO that is run well since they will be gaining access to much of your sensitive information.

You can look for signs of promise such as membership with NAPEO (Nation Association of Professional Employer Organizations). You can check if they’ve gotten their voluntary certification from the IRS or if they are applying for it or have plans to apply in the future. Who verifies their financial statements and operations? Is it an outside source? If at all possible, you want their financials to be approved by an objective auditor.

#2 – Do They Know Their Compliance?

You need to have a PEO that has an expertise in compliance so you can calm your worries about the topic. There are many changes happening with compliance so you want to make sure they are up on everything new. If you do not comply, it can be expensive and time-consuming to remedy the problem.

You should be able to rest easy at night knowing that your PEO has the knowledge necessary to help you with any concerns you have about compliance so they can support you with the development of systems and process to make it easier to deal with compliance demands. Whether this is monitoring change or ensuring that you are up to par with compliance.

#3 – What Benefits Do They Offer?

You need to have all of the benefits that you need with the PEO that you choose. One of the big reasons companies choose to work with PEOs is the ability to access better benefits and more options around  benefits. Find out what they offer before you sign on the dotted line.

Look at the benefits they offer and see how they compare to what you currently have set in place and what would happen in terms of cost if you were to make the change. Do they have additions that you might not currently have on your benefits that would attract more talent? Know your goals and see if they can help you achieve them.

#4 – Do They Have References?

If at all possible, you want to work with a PEO that has a good track record and has worked with companies like yours. Some of the things you should look for are similarity in size, industry, goals and any challenges that you might be facing. That way if you have seen them successfully help those other companies, you know they have a good handle on what is going on with you and your company.

See if they can offer you case studies of how they will help you and then ask to speak with current clients, references and business partners that can share about their experience with them. This will help you get an overall feel for the company and its reputation. Don’t be afraid to make those phone calls and ask the hard questions because those are the questions that you need answers to the most.

#5 – How Will They Help Your Team?

You need to pay close attention to the service-level agreement aka SLA since it is the operating document that lays down the relationship rules. You will see the services that are provided but you will also see how much assistance you will be getting from the PEO. You will see what your responsibilities and the PEO’s responsibilities are.

While partnering with the right PEO can take your business to the next level, if you don’t choose the right PEO, you could have the exact opposite result.

Clearly having the responsibilities of each party laid out is one of the key areas. If you don’t understand any of the wording, don’t be afraid to ask for it to be written out in a more easy to understand language so there can be no misunderstandings. If you think the other person is going to take care of an important function but it was really yours responsibility, you could run into major problems.


Taking your time to vet each PEO company you are considering and do your due diligence is important. There is much at stake but much to gain for getting the help of the right people in your business. As you are looking through the information on each of these companies, make sure you are looking for the one that is the right fit for you vs just “the best”.  Just because one company is rated higher doesn’t mean it is the best for you so keep a close eye out as you are searching for your solution.


About the author

Susan Paige

Leave a Comment