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Here are 9 Important Things to Consider Before Choosing a PEO for Your Business

Updated: Mar 31, 2022

Here are 9 Important Things to Consider Before Choosing a PEO for Your Business
Here are 9 Important Things to Consider Before Choosing a PEO for Your Business

Working with a PEO requires that you consider the benefits for your business. Here are some things to consider before choosing a PEO.

Experience and Expertise

Before choosing a PEO company to partner with, it is important you verify the experience level and expertise of the PEO Company. To ensure that they’re capable of handling your business needs, you may need to check up on the PEO’s background and certifications and make sure it is accredited.

Access their staff qualifications, if possible. Also, make sure that the PEO’s risk management, operational, and ethical practices are certified and in accordance with current regulations. If you need custom services, you also need to confirm if the PEO can provide you with custom industry services that fit the specifics of your industry and HR needs.

Employee Benefits Plans

Getting affordable and competitive benefits plans is one primary reason why most organizations partner with PEO companies. Working with a PEO gives you access to better health benefits and a broader range of options to choose from.

Ask questions about workers’ compensation insurance, employment practices liability, insurance, health insurance, etc. A PEO company with access to multiple insurance carriers and networks is more likely to be able to accommodate the needs of your staff and support the growth of your company if you need to expand to other states or regions.

Confirm if they offer other beneficial incentives that support the growth of your business and staff satisfaction.

Financial Strength

Partnering with a PEO company that lacks the financial backbone to cater to its clients' needs can drastically affect the quality of service you get from the PEO. For this reason, it is ideal to find out if the PEO adheres to the industry’s professional performance practices, including auditing of their finances by a certified and independent financial auditor.

This helps you ensure that the PEO has sufficient financial reserves to handle any loss-sensitive or self-insured insurance plans. Although independent audits do not prevent fraud from happening, it helps you know that the PEO’s financial statements are accurate, complete, and well presented.

Cost of Services

The cost of hiring a PEO depends on a variety of factors, including the size and scope of the PEO you want to partner with. But it mostly depends on the services you want from the PEO.

Sometimes, the services covered vary, and the charges also vary across several states. However, here are some standard charges that every PEO will likely for, regardless of the PEO you decide to hire:

● Federal Unemployment Tax Act (FUTA)

● State Unemployment Tax Act (SUTA)

● Federal Insurance Contributions Act (FICA)

● Workers Compensation

● Medicare

Before signing a co-employment partnership with the PEO, make sure you know what you’re getting and how much the package will cost you. Also note that when calculating the cost of a PEO, you want to also remember that the cheapest isn’t always the best. Ideally, you will be expecting quality service from your PEO, and the same goes for the PEO in terms of the charges involved.

Track Record

Another way to know that you’re about to partner with the right PEO is to look at their track record. Ensure that they have a track record of success serving businesses like yours. Check their track record regarding the industry, company size, and range of companies they have served in the past.

Check their customer references, real-life case studies, testimonials, and online reviews, if available. Consider interviewing other companies currently using the PEO or have partnered with the PEO before. This way, you can be sure of the quality and capability of the company you want to outsource your HR services to.

Compliance with Regulations

A common HR issue for many businesses is dealing with compliance-related matters, which are sometimes legal in nature. Choosing a PEO that’s experienced in handling compliance issues can help mitigate those risks. The thing about compliance is that it changes from time to time as federal, state, and local authorities release new legislation and mandates.

Unfortunately, non-compliance with these changes can have a significant and costly impact on your business. A reliable PEO should be able to help you with your compliance concerns and also provide you with adequate support from keeping up with changes and ensuring compliance with regulations.

Reliable Customer Service

Your PEO partner company should be available to help you navigate any HR issues you’re having. Communication should be seamless and fluid; you should be able to get in touch with your PEO account representative whenever you need help.

Ideally, you should know the services you’re paying for. Most PEOs have a set package that they offer their client companies, but are often flexible enough to include custom services. The company should answer all questions that you and your employees may have regarding these services.


When it comes to HR services, there’s a lot that can be done without human input. Automations today, help to advance a lot of HR processes like onboarding, payroll management, tax filing, employee performance reviews, etc. Most of these tech solutions are not affordable to startups and small businesses, but partnering with a PEO company should give your organization access to advanced technology for increased efficiency.

Confirm that the PEO company’s technology solutions are standard and fit for your business. Ideally, the PEO company you’re partnering with should provide you with tech-powered services, with an efficient reporting system for an easy-to-use platform. Also, consider requesting a demo for new technologies so you can fully understand what the platform is like and how to use it efficiently.

Customized Solutions

Find out if the PEO can offer customized solutions to your company. Find out if the

PEO uses a one-size-fits-all approach for all clients or offers customized HR solutions. Be sure to clarify the unique needs of your business, if any and understand the cost implications before choosing the PEO company.

Getting tailored solutions for your company's needs can help you improve your productivity and efficiency. In fact, as your company grows and becomes more complex, you’ll find that you need to renegotiate the terms and services you’re getting. When the time comes, it helps to know that you have a PEO that can go all the way with you.

Final Thoughts

Choosing a PEO can be pretty exhausting, but it doesn’t have to be. Once you have defined your business goals, growth trajectory, and budget, the burden is lighter. In the end, it’s all about the vision you have for your company - that’s what determines the PEO company you partner with.

For help when choosing a PEO, you can reach out to us at Mission. We are here to help companies like yours overcome the HR and PEO-related challenges. You can learn more about partnering with a PEO by downloading our ebook, The Ultimate Guide to PEO

1 Comment

PEO Broker LLC
PEO Broker LLC
Feb 09, 2022

Thanks for the best helpful article for sharing with us.

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