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3 Step Guide to Switching PEOs

Updated: May 17


Researching alternative PEOs could provide savings, billing transparency, improved service, and growth
What could changing PEOs do for your organization?

Partnering with a PEO is critical for many mid-sized enterprises. PEOs provide a wealth of services such as human resources, employee benefits, seamless payroll, and assisting with hiring or firing. However, as your company grows and changes, it's very possible that you may outgrow your current PEO and ultimately need a more comprehensive solution than when you first started.


If you've been evaluating the effectiveness of your present PEOs platform for a while, you may need to conduct a PEO audit to determine the importance of changing partners. Here's everything you need to understand about altering PEOs.


1. Defining your reasons for changing PEO services


Sure, you may have become comfortable with your current PEO, but that convenience could cloud your capacity to determine whether or not your PEO provides everything you really need. There are a few specific factors as to why businesses should consider a change.


  • Savings. Some businesses are charging more for services than others. If the economy hits your company especially hard, you may need to look for a PEO that fits your budget better. Be conscious, however, that cheaper PEOs are likely to provide fewer reduced quality alternatives or services than more costly ones.


  • Sub-par service. It's time to move on if your PEO doesn't serve you correctly. Poor service can occur in missed communications, avoidable mistakes, or even broken processes, such as over or underpayments or missing deductions.


  • Transparency billing. Some PEOs are not prepared to let their customers know what their detailed charges really are. Payments for multiple PEO services may be divided into a lump sum total, and PEOs may fail to share the to expenses of taxes, premiums, or services. Like most companies, I'm sure yours exists to produce profit, not to spend it, so businesses like to understand precisely how PEOs use their cash. If your PEO doesn't share with you how your fees are allocated, you might be able to do better somewhere else.


  • Growth. The most significant objective of any company is growth, and sometimes businesses move quicker than the suppliers they use. Your business may have more employees than your PEO can handle, or you may want benefits that your PEO simply can not provide; there are myriad ways that PEOs can not evolve with a company, and the only way a company can keep up is to get out.


2. Timing is crucial in changing PEO companies


Despite the distinct reasons for changing PEOs, the timing of the change may be critical. Payroll taxes and health insurance charges reset during particular times of the year, which means you could save severe cash by choosing a fresh PEO service provider at the correct moment.


Payroll taxes are taxes levied on workers ' paychecks on social security, Medicare, and other taxes. If you alter your payroll service provider at the wrong time, these already-paid taxes are typically forfeited, meaning you're going to have to repay all those obligations. This error could cost you tens or hundreds of thousands or more, depending on gross annual payroll and the number of employees.


You also risk insurance deductibles for your employees; as these payments add up throughout the year, if you change benefits packages mid-year, you and your employees may lose all the cash you have contributed to deductibles and have a reset.


Lastly, if you are working with a CPEO, the rules can be a little different, so you'll want to check here. What is a Certified Professional Employer Organization (PEO)? (All You Need To Know)


3. Changing PEOs


Once you've decided that your current PEO isn't making the cut, you may be tempted to find someone that does fit your needs. That said, it's imperative that you allow enough time for research, or you could find yourself in a similar situation; using the wrong PEO thus creating unnecessary headaches and costing you more cash than you thought. On the contrary, we recommend that you be patient and diligent in your new PEO evaluation.


Your first step should be to review your new requirements and how they are not served by your present PEO. You need to understand exactly what to look for before you start your search. This will allow you to narrow down your search and offer you something to look for in the extensive list of PEO capabilities.


You can go back to more particular issues after compiling a list of probable applicants to discover the best fit. You should ask questions such as how long they have been in business, how many customers they serve, what markets they work in, and what is their strategy for managing your local and state compliance. You should also be wondering how they will bill you — it's a solid best practice to get some clarity on all of the fees you'll potentially be subject to since the price of your services is always an important factor in your decision.


Lastly, most PEOs should operate so well that you hardly notice they're there. However, when a PEO becomes unmanageable, it is time to look elsewhere. The search for a fresh PEO may be grueling, but if you discover the perfect fit for your company, it will be a rewarding experience.


For a first-class HR experience that will help you find the best solution for your needs, let's schedule some time to talk today.


About The Mission


The Mission is a leading partner in the PEO, HR, payroll, and benefits outsourcing marketplace. We provide a valuable service for small and medium-sized organizations and government contractors, serving as a trusted partner in integrated human resource (HR) compliance, risk management, employee benefits, employment practices liability insurance (EPLI), and payroll processing.