A Professional Employer Organization or PEO is an Employer Services Provider that aggregates many companies’ payroll and related requirements and manages them for the individual companies. This allows them to offer top notch professionals to manage the clients’ payroll-related needs at a low cost. As an illustration of the savings related, I like to use a “bench strength” example. If any company were to hire the professionals required to handle high-grade employer services staff internally, it would look something like this:
Expert compliance paytech $ 55,000 yr
HR manager $ 75,000 yr+
Benefits administrator $ 50,000 yr
WC Risk manager $ 75,000 yr+
Total payroll before taxes $ 255,000 yr + benefits
Guess what, those highly paid staff would likely be sitting on their hands most of the time. A PEO has a cadre of that level of staff that comes off the bench as needed and provides services. A PEO charges an administrative fee of between 2%-3% of gross payroll for those services. They also provide Workers’ Compensation insurance at reduced rates because they aggregate all their clients together to get lower rates from the Workers’ Compensation insurance companies.
If you would like to offer employer services to your clients, with 10 or more employees, and share in the commission paid by the PEO, I will help you plan and execute a presentation for your clients. The PEOs that I work with pay a broker commission of between 10% of admin fees and 10% of Workers’ Compensation Insurance premiums. Commissions are paid monthly for as long as the client uses the PEO. I will provide the training to make closing a sale as easy as 4 Magic Word, “Who Does Your Payroll?”
Let me know by email if you think this might work for you.
Peter VanSon, CPA