Dangers of Human Resources Outsourcing

Are there dangers? You wouldn’t think that we would talk about the dangers associated with a PEO company like us. There aren’t many, but we would be negligent in our efforts to educate you if we didn’t present them.

Although the PEO model is an obvious solution to business, there are potential pitfalls associated with Human Resources outsourcing if you do not have the right PEO company or the right business situation.

You probaby don't want to consider Human Resouces Outsourcing if:

• you have independent contractors, not employees
• you haven't found a reputable Human Resources Outsourcing partner who is a member of NAPEO
• you like to control every piece of paper in your office (although you still can with a PEO)
• a relative runs your payroll and doesn’t want to retire (usually your mom )

We suggest using a set of Guidelines in your process of researching an Human Resources Outsourcing partner, or PEO company. These Guidelines, along with common sense, can assist in detecting a “dangerous” Human Resources Outsourcing situation.

For example, in the Human Resources Outsourcing arrangement, it's our responsibility to pay your employer tax burden and file the 941 each quarter.

You will want to have some assurances that the PEO company you choose is able to do so and will follow through with the task. At the very least, check their references!

There are a few PEO company that will send you a notice from an independent third party stating taxes have been paid each quarter.

You may also want to ask about their HR Team’s experience record, licenses, etc.

For more information, contact us or request a proposal to discuss strategies about how to choose the right PEO company.

We are not advocating that Human Resources Outsourcing is any more risky than any other business transaction. However, just like every other business transaction, one must do their due diligence as the stakes are very high.

Correct payment of wages and taxes, along with proper treatment of your employees through the HR and Risk Departments is crucial to shield your company from unnecessary liabilities. Your PEO company, someone like us, should have experts in all areas of HR, not just payroll, in order to effectively protect your number one business asset: your employees.

Attract and retain the best workers by making available: Better benefits Improved risk management Human resources All at lower costs! Learn more about what a PEO company does.