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May 6, 2016 by
aliereadvisors
How hard is it to leave a PEO once you’ve had an established relationship with one? The short answer is that it can be a nightmare. Different PEOs offer different services, from individual services like payroll to full-service relationships that cover a company’s every human resource need. Being in a relationship with a PEO, no matter how many services it includes, can be completely transformative for a company. A great PEO saves you and your employees’ time, increases productivity, attracts and retains talented workers, keeps the company compliant, reduces risk, and may even improve your company’s reputation in the community. On the other hand, leaving a PEO can also be transformative to a company: it can take up time, create chaos, damage corporate culture, and can cost you the great employees in whom you’ve invested.

If you’re leaving a PEO, your company will have to take over all of the tasks for which the PEO was once responsible. Without the PEO’s payroll, timekeeping, and other systems, your company will have to develop their own. This can require hiring and training staff to handle these tasks. Not only will this take up time and effort, but there can be difficult growing pains while the kinks are worked out with the new system. Think of the original reasons you went with a PEO: these systems are tricky and time-consuming. Are you ready to take that on again?

It can be tough to get affordable insurance and benefits for employees if you have been with a PEO for many years. One employee benefits consultant told Proformative.com that getting insurance for the first time after working with a PEO can be hard because insurance companies have nothing to base quotes on. Your employees were pooled with a larger group before, so it can be hard to get an accurate quote. It can also be expensive to afford a benefits plan that compares to that of the PEO without the large group of employees a PEO represents.

Leaving a PEO can affect taxes for your company and your employees. You may need to reinstate the company’s state unemployment tax account (SUTA.) If you end your relationship with a PEO after January 1st of the year, you could also create tax withholding issues for employees.

If you are considering leaving your PEO, it’s important to look at why. Do you really not need a PEO or is it that you’re not satisfied with your current PEO? If it is the latter, consider working with a consultant to find a better fit and greater value with another PEO. If you think you may not need a PEO, you may still want to partner with a PEO for fewer, individual services. While you may want more control over many of the human resources matters, you may want to outsource payroll. Unless you’re ready to develop your own system and review the ever-changing labor laws and regulations, using a PEO for just payroll can make things run more smoothly at your company.

Remember, there are many different PEOs, but leaving any one of them can be difficult. Instead of going it on your own, look into partnering with a different PEO or changing the services to which you subscribe. It might just save you a headache – and a total nightmare.

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