How to choose the right PEO for your business

A Professional Employer Organization (PEO) provides robust HR services to small and medium sized businesses via a co-employment relationship. It provides employees access to big-company benefits while handling crucial administrative HR functions like payroll processing, compliance management, workers’ compensation, benefits administration, and other administrative tasks. Meanwhile, business owners maintain control over the operational aspects of their business, like business strategy, hiring, and building company culture.

In the past, companies would need to fully outsource HR services to a PEO. But with modern technology, businesses can now automate HR services and keep their most important information in-house, while still benefiting from time savings, advisory services, and better benefits.

If you’ve decided a PEO is right for your business, your work isn’t done just yet—you still need to find the right PEO. The best PEO for any business is the one that supports your unique business needs and goals. The five considerations below will help you make the right decision. Let’s get started.

1. Evaluate if the pricing structure fits into your budget

First things first: Find out the cost of the PEO and what services it covers, so you can evaluate whether its pricing structure fits into your budget. 

Typically, PEOs follow one of the following pricing structures:

In both cases, the exact PEO cost depends on their pricing structure and your service agreement. Before committing to any PEO, make sure the costs align with your budget, now and for your organization’s foreseeable future growth.

2. Ensure the PEO services align with your business needs

One of the hardest parts of choosing a PEO is understanding which people management tasks your business needs help with. That’s why, before you even talk to a PEO, you should assess your business needs in areas like payroll, HR, and compliance to get an understanding of how you can maximize the value you’ll get from a PEO service provider. Think about your current challenges, but also about any future changes that might impact your HR needs.

In more detail, here’s what to consider:

On top of these considerations, meet with any PEO you’re considering—and the team that would serve your needs—to get clarity on the services they’d bring to the table for your company. Find out the following:

With Rippling PEO, support and guidance are available for both you and your employees. HR admins are supported by Rippling account managers and PEO HR advisors, while employees can contact Rightway Health Guides, a concierge service that can help with healthcare and benefits-related topics—like finding care, scheduling appointments, or reviewing bills—who are always just a call or chat away to educate, advise, and advocate on dozens of healthcare topics.

The easiest way to manage your HR and IT

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3. Consider if the PEO software integrates with your other tools

The PEO you choose should make your life easier, so the next question is this: Does the software the PEO is built on integrate with other tools you use?

Having all your systems work together is key to an efficient workflow. If your PEO doesn’t integrate with your existing tools—like spend management, G-Suite, Slack, and Salesforce—you risk data inconsistencies, inefficiencies, errors, and frustration.

One thing to be wary of: Many PEOs and HRIS providers claim to be “all-in-one.” But in reality, all-in-one is not always equivalent to integrated, and even systems that share the same logo may be disconnected on the back end, siloing data and slowing your business down.

The truth is there’s only one truly integrated PEO provider: Rippling. Compared to other outdated systems, Rippling offers a next-generation platform for growing businesses—and you can turn Rippling’s PEO product on or off as it suits your needs. Plus, Rippling has over 500 integrations with the most popular apps and tools, fitting seamlessly into whatever systems and workflows your team has in place.

4. Understand what employee benefits the PEO offers

Today's top talent craves more than just a paycheck—they're after high-quality, affordable benefits like top-tier health insurance, retirement plans, and more. In fact, a survey of 1,165 employees showed that 32% of job seekers say benefits are as important to them as salary when they’re looking for a new job.

So not only is it critical to offer competitive benefits that attract top talent—your benefits must align with the unique needs of your workforce. That’s why, when comparing PEOs, one of your top considerations should be the employee benefits plans they can offer your employees.

It’s typical for PEOs to be able to offer some combination of these:

When talking to PEOs, you’ll want to ask about the benefits carriers they partner with and the types of plans they offer. You’ll also want to find out if you can pick and choose from their benefits to create custom benefits packages to meet your employees’ needs and expectations.

With Rippling PEO, you can access big-company benefits, including Fortune 500-caliber medical, dental, and vision insurance, pay-as-you-go workers’ compensation plans, EPLI coverage, HSA, FSA, and more—likely for less than you’re paying now. Your employees will also get free access to concierge, on-demand benefit navigation services via Rightway to help them pick benefit plans, schedule appointments, understand bills, find in-network providers, and more.

Better HR and benefits, for less

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5. See how the PEO mitigates compliance risks

Under a co-employment relationship, the PEO assumes liability and responsibility for payroll taxes, employment taxes, and adherence to federal, state, and local labor laws. Neglecting compliance can lead to costly fines and even litigation, which is why compliance should be your top priority.

The average employment case costs a business $160,000 after defense and settlement. That’s why complying with employment and tax laws should be a top priority for your business—and a PEO can help with that. With today’s technology, reputable PEOs should be automating processes to help you ensure compliance, like filing tax returns by their deadlines, calculating final paychecks, ensuring employees meet minimum wage requirements based on their locations, and more.

How do you know if a PEO is reputable? One way is to see if it’s been independently audited. According to the US Chamber of Commerce, you should “look for third-party assessments of financial statements by CPAs or risk management practices from the Certification Institute. The Employer Services Assurance Corporation (ESAC) audits PEOs for financial reliability and best practices.”

You can also see if they’re a member of the National Association of Professional Employer Organizations (NAPEO), a professional organization that encourages its member PEOs to follow a code of ethics and best practices.

Here are a few other tips:

Rippling PEO offers automated compliance monitoring that covers local, state, and federal levels. It provides real-time alerts regarding labor law changes and offers actionable guidance to promptly address any compliance issues. Rippling PEO also automatically sends electronic labor law posters to your employees—directly to their Rippling account. This proactive approach streamlines compliance management and, in turn, safeguards your business from potential legal and financial consequences.

See how Rippling PEO stacks up

Rippling PEO is a modern, all-in-one, integrated solution—the easiest way to manage HR for startups & high-growth companies.

Here's how Rippling compares to other leading PEOs according to G2: