What Kind of Business Uses a PEO?

What kind of business uses a PEO? Is a PEO a good fit for your company?

Maybe you aren’t sure if your business is the type that would use a PEO, or think that your needs are different than what a PEO could offer you. However, a wider range of businesses utilize the services of a PEO than you might expect.

There are many questions that you might have when trying to decide if a PEO is right for their business. We’ll do our best here to answer these questions and give you a better idea of what kind of businesses use a PEO.

What Industries Use PEOs? 

What industries do the companies that use a PEO belong to? Are there certain industries that are better fits than others? Are there types of companies that cannot use a PEO?

A wide range of companies utilize the services of a PEO. The companies that are the most natural fits for PEO services are ones where time equals money, and every moment spent worrying about administrative details directly affects how much money is brought in. For these companies, any time spent on “non-revenue producing tasks” is time wasted.

For example, if a plumber who owns his own company with a fleet of employees, but also does the work himself, then the number of hours he works has a direct correlation with the amount of money he makes. Other professions, such as lawyers, consultants, and many others also fit this category, and are excellent fits for a PEO.

There are some companies that do not fit as well with a PEO, however. These are generally companies that are considered to be too “high risk” to be covered by their work comp insurance carrier. Worried that your company might fall in this category? Just ask us! We will get back to you right away. 

How Many Employees Do Companies That Use PEOs Have? 

How big are businesses that use a PEO? Do you need to have at least a certain number of employees for the service to be worth it? Can you be too big for it to help?

The businesses that most commonly utilize PEO services are small businesses with under 100 employees, especially those between 5 and 50 employees. This range is when a company has enough employees to really feel the administrative burden and headaches, but are typically not large enough to hire their own in-house HR personnel to handle those issues yet.

What about companies with less than 5 employees, though? Are they too small for a PEO? Could a PEO still help them?

The answer to this can be a little complicated and case-by-case, but there are definitely situations where a PEO can help companies this small. This is especially true of companies dealing with specific challenges. Possibly the biggest example of these challenges is working in multiple states, each with unique regulations and requirements.

Even some companies larger than those typically utilizing a PEO’s services may find a PEO to be helpful. This is especially true of companies with locations in multiple states, each with unique regulations and requirements to worry about. For them, a PEO allows their in-house HR team to focus on more strategic tasks instead of administrative and compliance issues that they are overqualified for, but use up large amounts of time.

Hopefully this answered some questions you may have about PEOs and whether they are right for your business. If you have any others we didn’t address, please let us know in the comments, or feel free to get in touch with us!

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