PEO Advantages for Small Employers

Written by Blake Odom

President & COO

Applied Business Solutions

December 4, 2018

Wages, insurance and benefits are often the most significant cost that small employers incur, and it’s getting harder each year to balance cash flow with those expenses. A Professional Employer Organization (PEO) helps small companies reduce expenses and improve operations while assuring that employee needs are met. PEOs are specialists at providing benefit, human resources, and administrative support to a variety of clients. For small employers seeking help with benefits, payroll, taxes, and more, PEOs deliver what you need for a fraction of the cost.


The quality of employment benefits significantly impacts employee morale, yet small companies struggle to give their people what they need to be satisfied with their compensation. Fortunately, a PEO can deliver competitive benefits for a fraction of the cost. A PEO is essentially the co-employers of every customer they serve, which allows them to leverage these numbers to deliver high-quality benefits to even the smallest business. Studies show that PEO health insurance can save companies as much as $2,400 per employee per year.

In addition to better healthcare coverage, companies that partner with a PEO are often able to offer a 401(k) benefit to employees. This option is out of reach for most small business owners but with the network of other PEO-served companies, this important benefit is now possible.

These economies of scale also result in lower costs for Workers’ Compensation, life insurance and more. With a PEO you can provide high-quality benefits to your employees and still stay within your budget.


Most small business owners want to focus on running their company and are not experts on the minutia of payroll, or state and federal taxes yet even the smallest and most innocent error can result in government penalties and wage and hour lawsuits. PEOs have experts who can address all payroll and tax issues, protecting their clients from these risks and freeing owners to focus on their companies.

PEOs can also address other payroll-based issues including:

  • Onboarding a new employee
  • Managing unemployment benefits
  • Addressing wage garnishments
  • Closing out the employment records of someone who has left the business

With this type of resource managing these complex yet mundane tasks, employers can trust that these actions are managed in compliance with local, state and federal laws as well as the company’s own policies and procedures.


Most small employers don’t believe that their companies are at risk of a cyber attack, but 58% of malware attack victims are categorized as small businesses. The cost of these attacks run in the millions and can put a small business, well, out of business. Effective PEOs understand the risks that face their clients and provide appropriate support services that can include:

  • Loss Control, Education and Training to keep everyone in the company up to date on the latest information and compliant with company rules.
  • Breach Response that helps a company quickly and effectively respond to a data breach.
  • Legal services, from advice to regulatory actions, to help navigate a breach with minimal exposure.
  • Business Insurance Plans that address customer and company losses, to keep the impact of the breach from closing the business.

Cyber attacks are on the rise and PEOs are great partners to minimize risk and protect against occurrences.

These are just a few of the many advantages that small companies receive when working with a PEO. Using these services makes your business a more competitive employer, compliant with complex laws, and protected in the event of cyber attacks. The cost savings from leveraging the buying power of the PEO’s clients make these necessary services affordable to nearly every size company. Applied Business Solutions is here to help with your unique needs so please contact us today to learn more.

What is Human Capital Management?

Human capital management (HCM) provides an overall strategy to hiring the right talent, managing performance and optimizing productivity.

Have a question? Our leadership team is here to help. Contact us today.

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Applied Business Solutions has 75+ years of combined Payroll, Insurance and Human Resources experience with companies ranging from 1 to 2,500 employees.