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Small Business Tips: PEO

Two groups of people meeting around a desk. Two people are shaking hands in agreement.

The last article in the Small Business Tips series discussed how to choose accounting software and some of the things you can use it for. One of those things is running Payroll, but simply managing the mechanical aspect of Payroll misses out on a lot of services you'll need for your small business if you're going to have employees.

Rather than running your own payroll, managing benefits, and running HR you can outsource all of these things (and more) to a Professional Employer Organization or PEO. Essentially a PEO is an all-inclusive service providing everything you need to add employees to your small business.

When you work with a PEO you are entering what is known as a co-employment relationship. In other words the PEO takes over the legal and administrative part of managing employees while you direct your employees through their day-to-day business operations.


Andromeda has been working with FullStack as our PEO for several years and it has been a fantastic experience. I have saved a tremendous amount of time and money by working with them.

Below I'll break down some of the services they provide that I have found helpful, so that you can see how a PEO may help you with your buiness.

I'm not associated with FullStack PEO in any way, just a happy customer telling you about my experience.


There's a lot involved in processing payroll, from tracking hours, withholding taxes, and filing the proper tax forms at the end of the year. Just setting up direct deposit for each of your employees can be a big challenge if you try to go on your own. Tracking PTO accrual and usage is also important. Our PEO handles all of this for us. The only role I play is to review and approve the payroll every two weeks before it goes out.


Because of the co-employment relationship, a PEO will generally have access to much better benefits for a lower price than you could get on your own. Without this, Andromeda could not have recruited some of the fantastic team members we've worked with over the years because we wouldn't have been able to offer competitive benefits.

Thanks to our PEO we offer the following benefits:

  • Medical insurance
  • Dental and vision insurance
  • Life insurance
  • Disability insurance (long term and short term)
  • 401(k) retirement plan

Team Services

If a member of our team have an issue with payroll or benefits, or just need someone to talk to regarding their employement, they have someone to call. General HR services are provided both to us as the employee and to the employee.

Our PEO put together an employee handbook for us that took our company culture into consideration while helping us maintain compliance with all applicable employment laws. As a bonus, this clear documentation reduced some ambiguity and confusion for our team about certain policies.


As mentioned above, there are a lot of different laws related to running a business. In fact, based upon your industry, states of operation, size, and other factors, you may have different rules that apply to your company. Your PEO can help you navigate this minefield and ensure that you're in good statnding with FLSA, ACA, EEO, HIPAA, and more.

Worker's Comp

Worker's Compensation is an important area that a small business may accidentally overlook. This requires both oversight of Payroll, providing services directly to employees in the case of an unfortunate incident, providing insurance to the company, and maintaining the necessary compliance in every state you operate in. Our PEO provides all these services in a simple way that requires no intervention on my part.


Expanding your business becomes very complex when you want to hire people from different states. If you do this on your own you may have to formally organize your business with the Secretary of State in the new state, file regular tax reports, and even follow different laws with respect to your employees, such as workplace conditions or h ours of operation. Your PEO can handle this extra paperwork for you so that you can hire employees across the country.

Running Your Business

If you decide to work with a PEO, great! You'll find that your ability to expand your business is really improved. When choosing who to work with, however, it's important that you find an organization you can build a relationship with. You also need your PEO to respect your company values as they apply to the employer relationship with your employees.

Take the time to meet with your prospective PEO and get to know the people who will be managing your account, and also be sure you understand the communication process when you have trouble. And as always, don't be afraid to meet with several companies before making your decision. After all, your choice here will directly impact your employees for years to come.

Next month the series continues by introducing Productivity Software, showing some options, and explaining how your choice may impact productivity and collaboration for your organization.

License: CC BY-NC-ND 4.0 (Creative Commons)