How to Choose a PEO

By now you know the advantages of partnering your company with a PEO: Consolidating vendor relationships keeps your costs predictable and your administration streamlined. When you have the right PEO handling your payroll, workers’ comp, health insurance, 401K and/or other administrative tasks, you and your employees can focus on your core competencies.

What’s important to you?

You didn’t go into business to get bogged down in payroll or insurance. By bundling these services under one vendor—ie a competent, reliable, efficient and experienced PEO—your company is free to do what it does best.

But all PEOs are not created equal, and even if you have several professional, experienced, well-run PEOs to choose from, the key is to find a quality PEO that also fits your company and its needs. PEO services are not one-size-fits-all. There are more than 900 PEOs in the U.S. How will you find the right one?

Some things to consider:


Because employment laws vary from state to state, you want a PEO that is well versed in the laws governing your company’s location. This may mean finding an established PEO with a long-term national reach, or hiring a smaller PEO that’s based in, and specializes in, your own state.


Likewise, different industries have different PEO needs, especially with regards to workers’ comp coverage, which is heavily determined by on-the-job risks. Whether you choose to go with a PEO that handles a broad spectrum of industries, or one that focuses on your particular industry, make sure you partner with someone who is well acquainted with the needs of your workplace and your workforce. An experienced and respected PEO in one sector may not have the expertise to efficiently handle the demands of a different industry entirely.


PEO services directly impact your employees. Before choosing a PEO, speak with your workforce and find out what they want in terms of insurance and retirement fund options, and then find a PEO that conforms to those expectations. Also: Ask questions about the PEO’s processes for resolving issues. If one of your employees has a payroll issue, how does it need to be reported and how quickly can it be resolved? Find a PEO that’s as committed to keeping your employees happy as you are.

Operating Style

Here’s where you need to be honest with yourself as a business owner, and come to terms with what you prefer in terms of service. You may be a businessperson who wants fast responses to address even small problems in an immediate fashion—in which case, you should find a PEO with a phone bank that’s always there to take your call. On the other hand, you may prefer the nuance and personalization of a one-on-one relationship—in which case you should find a PEO that provides you with a dedicated point-of-contact.

And lastly, keep in mind that PEOs are your business partners. They share your liability, and they should be committed to your company’s wellbeing. Enter into a PEO partnership just as you would any other business relationship, and you’ll reap the full benefits.

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