There’s a common misconception that an employee leasing services and PEO company are exactly the same, but that’s simply not true. There are many differences between the two, which should be known before you begin shopping around for either. Use this guide to learn all of the differences between employee leasing services and PEO companies, so you know exactly what to look for.
What is a PEO?
PEO stands for Professional Employer Organization. These companies are numerous, with nearly 1,000 of them operating within the US. The PEO industry is booming, with an average of about 8% growth over the last decade, and billions of dollars in profits. PEO services have made small businesses all over the nation more compliant, streamlined, and functional by providing some of the most essential services to businesses of all sizes. (Go here for the best PEO companies in New York.
Payroll compliance and accuracy are crucial to any business but can be quite difficult to maintain for small businesses with limited resources. Falling out of compliance with government agencies can land a small business in hot water, and even shake the faith of the business’s employees, all of which are detrimental to growth and productivity.
PEO services can handle payroll so small business owners can get back to their business growth. Compliance and direct deposits, withdrawals, and more, will be handled professionally and punctually.
Personnel and Onboarding Services
PEO services have been credited for reducing turnover rates in small businesses and improving the overall onboarding process for new team members. The first impression your business makes on a new employee can make all the difference in their loyalty to the company, and a high-quality training program can inspire them to be more productive and happier overall.
A PEO service can handle the application and onboarding process, finding only the best candidates to fill open positions. Don’t spend hours sifting through endless applications only to find that none of them meet your requirements; a PEO can handle each of these tasks quickly and easily and improve your staff.
PEO services have access to far better benefits packages than most small businesses do. This is one of the main reasons why companies trust PEO companies because most standalone small businesses simply don’t have access to good benefits because of their size. PEO companies combine thousands of small businesses to form a large corporate entity, which grants each business access to far better benefits options for their employees.
Essentially, a PEO service is an outsourced HR service. Any needs that apply to personnel, including payroll and administrative tasks, will be handled by the PEO. Since most business owners lack the proper training to handle both accounting and HR, a PEO company is a perfect option.
Employee leasing companies don’t specialize in providing benefits or HR services to businesses, but rather on supplying qualified laborers; usually on a temporary basis. Also known as “temp-agencies”, these services help to fill employment gaps and can even help businesses find their next full-time employee. That being said, the supposed connection between PEO services and Employee Leasing services is simply non-existent. Though some larger PEO services do offer employee leasing, it’s a separate service from the PEO benefits.
Employee leasing is a popular option among small businesses with positions that aren’t full-time. Seasonal employees or temporary workers for vacant positions can be found easily, and the staffing service has access to some great candidates for your business. You’ll be paired with only the candidates that meet your requirements, and you’ll get to set the wages for your tempory staff. Once the temp period is up, you can choose to either hire on your temporary staff or let them go.
Which is Right For Me?
Since PEO services and employee leasing services are so different, which one you should use for your small business depends entirely on your needs. Where one business may have a staffing issue and need immediate temporary staff, another may have a greater need for payroll or HR services. If your company is suffering from compliance issues, payroll problems, or a lack of HR staff, a PEO company is probably the best option for you.
Otherwise, you’ll want to use a leasing service to fill employment gaps and perhaps even find a great candidate to fill an open position.
The Bottom Line
Businesses of all sizes trust both PEO company services and employee leasing services to fill their individual needs, but it’s important to know the difference between each before you choose between them. Temporary staffing isn’t an option for every business, and not every business is good at handling things like HR and payroll. Know the difference between these two services and how they can benefit your business, and you’ll be able to make an informed choice that will take your business to the next level.