What is a PEO and how do they work?
So, you’re in a position now where you need to hire employees. Your business is experiencing steady growth locally, and there are prospects of moving into new international markets.
…You’ve reached the tipping point, and your management teams are struggling to keep up with the increased HR administration… You need to hire more employees, but you don’t have a dedicated team to make that happen.
What comes first? The chicken or the egg?
It’s an all-too-common problem growing businesses face. Some companies may not have the resources, skills or capital to hire a full-time accounts and HR department to wade through the ever-increasing pile of documentation. They find it almost impossible to keep up with employment compliance. One thing leads to another; they crash and burn under pressure.
Luckily there are ways to prevent businesses from falling down this hole. One of these ways is by partnering with a Professional Employment Organisation (PEO). A PEO is an external independent agency that businesses partner in a co-employment agreement to assist in various HR functions.
What is a PEO?
Working alongside a PEO means you will continue to manage your staff as you would normally, while we as your PEO will be classified as your staffs’ employer of record. We’ll take care of your payroll, compliance, tax and leave entitlement processing, while you and your teams can focus on growing the business.
How much control will I lose if I partner with a PEO?
When you partner with Australia PEO, you enter into a co-employment agreement. What this means is we become the legal and formal employer of record for your staff here in Australia. We take care of pre-determined HR functions on your behalf and process wages under our tax ID, while you continue managing your staff from afar. We share liability and control, and therefore we share risk. A PEO model might not be the best option for you and your teams if you’re not comfortable with handing over some of your control to a PEO.
How much will partnering with a PEO cost my business?
You must understand the pricing structure of the PEO you choose to work with, to avoid nasty shocks down the line.
Some PEOs will charge a percentage of the total pay of each employee. Others will charge a fixed rate that fluctuates as pay increases. For the latter, you’ll need to make sure that you won’t be graced with nasty ad hoc fees and hidden charges for additional features, as is typical.
At Australia PEO, we work to a simple fee structure that helps to maintain transparency and limit inefficiency for all parties.
What sort of businesses work best for a PEO?
Generally, PEOs can work for any business model and any business size, but there are two main areas when they work particularly well.
When a business expands into a different country, they’ll usually be required to set up an entity in the country to hire local employees. The process of doing this can be costly and inefficient, and that’s not even guaranteeing the business will take off! When you work with Australia PEO however, you eliminate the need to set up an entity in the country, which means you could effectively have employees hire, onboarded and up and running in a matter of hours.
Resource light businesses
For businesses in the early stages of growth with limited capital inhibiting them from hiring a full stacked HR department, a PEO can be a great week to alleviate the stress of growing pains. In essence, you only pay a PEO for who you employ.
Are you looking for a PEO in Australia to help you expand into Australia or assist with your growing HR obligations? Contact us today.
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