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Start-Ups: The Importance of Time Management and the Advantages of Utilizing a Professional Employer Organization (PEO)

June 03, 2015 | Leave a Comment

Challenges abound for start-up companies and range from driving strategic direction to managing cash flow to meeting revenue projections. All are vitally important to the long-term health of a new business and warrant the majority of your employees’ time. It becomes difficult to remain focused in these key areas when the minutia of running a business starts to take over. The day-to-day detail can be overwhelming and begin to work against your company as you try to remain focused on your strategy. Operational areas such as Human Resources, worker’s compensation, risk management, employee benefits, and payroll administration can begin to drain valued resources.

Professional Employer Organizations (PEOs) offer a shared-employment arrangement that allow you to transfer much of the day-to-day HR-related work, as well as much of the employer liability. You and your company continue to maintain 100% of the direction and control of your employees. For example, you as an employer have the right to hire and fire an employee. The PEO will work with you and manage the process which, in turn, limits your legal risk.

When working with a PEO, you can expect the following:

No Need to Start from Scratch. A PEO will minimize surprises (always an issue with start-ups). An employee handbook with policies and procedures will be designed for your business. The PEO will make sure you abide by the laws associated with employment, benefits, payroll, etc.

Attraction/Retention. With Health Care Reform rules being changed for small business, it is quite often a financial benefit to become part of a larger employer group. The PEO will be able to offer your employees benefits and quite often, a 401K plan that would not be available to you as a small business.

Shifting Liability.  Compliance and legal issues are many times, the downfall of start-up companies.  The draining of cash reserves can cripple a start-up from the very outset.  A PEO will shift much of this liability and implement policies and procedures that will help mitigate the risk.  Also, a PEO will keep you in compliance of federal and state labor laws including FMLA, ADA, PPACA, FLSA, HIPAA, and sexual harassment to name a few.

Cost Reduction. Always a major concern for start-ups is how to minimize costs. A PEO will be your HR arm and allow you to save resources for revenue-generating activities.

As an owner/manager of a start-up, you are undoubtedly wearing many hats. It should be imperative for you to transfer as much work as possible onto your service providers while you focus on meeting your goals. A PEO allows you to expand your HR department without adding the additional cost of employees. If done correctly, the advantages will increase your profitability by maximizing employee productivity, reducing time spent on transactional HR, reducing your liability, and ultimately lowering your labor costs.

For more information on PEOs or how Cornerstone Insurance Group can impact your business, please call (877)908-8989.

Written by Steve Kickham, Cornerstone Insurance Group Benefit Consultant

Posted in Benefits, Blog

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