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Blog · Published: October 9, 2019 Updated: January 14, 2022

Best PEO for Startups

Did you have a eureka moment?

Or has it been a long, hard slog to get here?

Perhaps both?

Regardless of how it happened, you’re the proud leader of a startup and you’re eager to transform your industry.

The excitement is palpable as your team grows, but you keep getting sidetracked handling the business of running the business. Your friend google has helped you figure out how to do key HR functions, but it’s fragmenting your focus. What about questions you don’t think to ask? Or questions you shouldn’t ask? These are looming concerns that you just don’t have time to address.

In reality, you could make all of these worries go away.

Professional employer organizations (PEOs) were created to address this exact scenario. You can tap into their team of human resources experts who specialize in employee benefits, payroll and tax administration, HR support and guidance, retirement services, workers’ compensation and much more. By outsourcing HR to a PEO, you can be completely focused on launching and growing your business. Not all PEOs are created equal, however, so make sure you partner with the best PEO for the unique HR needs of a startup.

Targeted solution

Whether bootstrapped or investor-backed, every dollar matters in the lifeline of a startup.  You need PEO services that can expand and contract to meet your evolving needs. An a la carte offering allows you to pay for the exact services you need. Initially you may offer health insurance, payroll processing, and basic HR assistance such as a guidebook and mandatory posters. The challenge is some PEOs bundle advanced HR services, primarily used by larger businesses, into your contract and billing. Ask for itemized pricing so you won’t pay for unwanted services and fall prey to this practice.

Flexible contract

It’s hard to project your growth trajectory at this stage. It’s also hard to anticipate big dips. While thrilling, it justifiably makes you cautious. The last thing you need is a long-term contract that no longer works for your small business.  PEOs vary on contract term policies. Some require long-term contracts whereas others recognize this isn’t feasible for a startup and offer 30-day agreements.

Personalized service

PEOs vary dramatically in size. When time is money, you don’t want to wait in an endless call center queue only to be connected with someone who doesn’t understand the nuances of your small business. That’s when partnering with a small or mid-size PEO makes sense. You’ll get a dedicated account manager who will know your business. That way, you’re not wasting time explaining things only to realize later you forgot to mention something critical. When screening PEOs, ask if you’ll have a designated contact. From questions about health benefits to life insurance, you’ll be able to direct employee inquiries to that person.

Minimum employee threshold

Even with only a couple employees, your startup has important HR needs. A great way to winnow down your PEO consideration list is to ask if they require a minimum number of employees to qualify for working with them.

On-site and Online Training

You and your team are not experts in HR so someone could unknowingly break a law. Even if unintentional, it could cost a lot of time and money to rectify. Ask what kind of training program the PEO offers. Are they willing to customize an on-site training program or can your team access online training? These proactive trainings can help you remain compliant and rest easier.

Certified by the IRS

In 2017, the IRS launched a certification program for PEOs. To earn CPEO status, PEOs undergo rigorous background checks and compliance verification. It offers some important benefits for startups including zero liability for federal employment taxes once you remit tax withholdings to your CPEO and being able to switch mid-year without a double tax payment. PEOs that have gone through this process have invested time and money to provide these additional protections to their clients.

As a leading Chicago PEO, MidwestHR has supported Illinois companies from startup to successful IPO. We understand the highs and lows that small business owners wrestle with, so we tailor our PEO services accordingly: a la carte services, no long-term contracts, dedicated account manager, low minimum employee threshold, customized on-site or online training plus you’ll enjoy the benefits associated with a PEO that’s certified by the IRS. Learn how we can manage your human resources while you grow your small business. Give us a call at 630-468-9286 to learn what is a PEO and how it can benefit your business.

Filed Under: Blog

David Nauert

In his 17 years at MidwestHR, David has worked to create valuable partnerships with prospective clients & strategic alliances. As Director of Sales and Strategic Alliances, he leads the Business Development team with over 21 years of experience in the industry.

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