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How Can A New Business Afford To Hire A PEO?

How Can A New Business Afford To Hire A PEO?


The stress of handling employee services like payroll, management of benefits, recruitment, new hire orientation, workers’ compensation, and similar issues often is a constant headache for new business owners. After all, you just started a company. You can’t be expected to know the ins and outs of every accounting, human resources, and compliance criterion. But hiring experts who do know these details may seem too expensive at first blush.

The truth is that acquiring the assistance of a PEO (Professional Employer Organization) is actually cheaper than hiring a full-time, in-house accounting and HR staff. In fact, new data collected by the National Association of Professional Employer Organizations shows that roughly 175,000 U.S. businesses partner with PEOs.

Not only can hiring a PEO like Einstein HR save you time and money, but business owners are able to choose a payment plan that works for their budget.

The Cost of a PEO

There are two primary ways that companies can pay for PEOs: as a percentage of their overall payroll or by paying a flat fee per employee, per month. Thus, there is no one answer regarding how much a PEO costs, and business owners can work with the PEO to decide what makes the most sense for their company and budget.

Paying a Percentage of Payroll

Depending on the size of the company in question, the percentage of payroll required to pay for a PEO may vary. Most businesses are assessed a fee somewhere in the middle of the average range, which is between 2% and 12%.

A new business owner may wish to pay as a percentage of their payroll in order to make budgeting more predictable. Another benefit is that this payment plan is easier to calculate and only gets larger as your business (and income) grows.

Paying a Flat Fee

The other option is to pay a flat fee every month based on the amount of employees in your business. Typically, this fee can range from $40 per month, per employee all the way up to $160 per month, per employee. Just as with the other method of payment, this fee depends on the size and structure of your company.

A flat fee may be desirable to some business owners because it does not grow as employee payroll grows. This makes a flat fee arrangement more flexible. However, this plan may not be suitable for companies that aim to add a multitude of workers in the future, as each employee will result in an increase to the monthly fee.

By working with a PEO like Einstein HR, business owners can select a payment plan that suits their needs and monetary concerns.

Ways That PEOs Reduce Costs

Though owners must pay for the services of a PEO, overall costs are usually decreased by outsourcing these services to organizations like Einstein HR. Cheaper than a fully salaried, full-time, in-house staff, PEOs can work to reduce costs in other ways as well.

  • Compliance Services: PEOs can help prevent costly litigation due to breaches of federal and state regulations.
  • Workers’ Compensation: PEOs can provide advice on proper safety procedures to reduce workers’ compensation claims.
  • Employee Benefits: PEOs can use the co-employment relationship to spread the cost of high-tier benefits packages across a wider pool of employees.
  • Employee Retention: PEOs can reduce costly employee turnover by offering better services and benefits.

This small sampling of services shows that most new and small business owners should be asking a different question: how can they afford NOT to hire a PEO?

A PEO That You Can Trust

Even though business owners can save tons of money by hiring a PEO for their HR and administration services, it is important to find one that is trustworthy and notable. At Einstein HR, we have been voted Best Customer Service five years in a row by Gwinnett Magazine. Backed by a slew of awards in previous years, Einstein HR was added to the Inc. 500 List of top companies in the United States in 2017.

Einstein HR is dedicated to providing high quality services to companies in need. We have experience dealing with businesses with as few as five employees and as many as 500, so no situation catches us off guard.

If you are a new business owner seeking the peace of knowing that your company’s services are being handled by professionals, do not delay. Get in touch with Einstein HR through our contact page or by calling us today at 770-962-1700 to start saving yourself (and your business) money. One of our representatives will speak with you within 24 to 48 hours.

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