What I Wish I’d Known about PEOs as a Small Business Owner

When I owned my small business, I did everything wrong.

I spent a few hours each week running payroll when the shops were closed (family time — who needs that?). I would get pulled away from customers because I had to field another call about an employee issue. And I completely missed some of the legal nightmares my business partner got us into (yes, I chose the wrong partner, but that’s a different story).

I was doing a bad job at all of it – but I didn’t know any differently.

How would a PEO have changed the situation? Trust me, no one has time to read my entire list, so I’m just going to take two instances that every small business owner dreads: hiring and termination.

Hiring employees as a small business owner

In my business, hiring went like this: I wrote the job description, posted it, reviewed resumes on nights and weekends, called applicants, interviewed, answered status emails and phone calls (i.e., “What’s taking you so long?????”), and scheduled background checks and drug testing and all of the follow-up calls those required.

Once an employee was hired, I handed them a stack of paperwork to fill out, reviewed it all when it came back, made photocopies, filed the signed papers somewhere (I think), and checked to make sure adding another employee didn’t mean we had to comply with more regulations that I didn’t know about (what do I mean? Read this).

Here’s how that compares to working with a full-service PEO like Stratus.hr:

When you outsource to a PEO (Professional Employer Organization), you know exactly who to call whenever there’s a question or employee problem.

I’ll admit that no single step in the hiring process is a huge hassle, but when added all together, it eats up a ton of extra time, of which I had none as a business owner.

Terminating employees as a small business owner

Whether someone was leaving on their own terms or because I was showing them the door, termination was never a fun job. It’s time consuming, too. And if you don’t do everything right, you can end up with an ugly lawsuit on your hands, which is going to take even more time and money.

For example, say I had an employee who didn’t bother to show up until four hours after her shift began, oh, like three times in a week. I would want to terminate her. But would I be putting myself at risk?

Well, yes. I would call my lawyer friend to find out what I should do. Did I document the problem? No. Did I warn the employee? Not yet. Did the employee sign anything indicating she knew the policy beforehand? I couldn’t find the paperwork. Was the on-time policy enforced or in writing? Oh, of course not. People should just be on time, right?

That meant I couldn’t go forward with termination, or I’d also need this lawyer friend (and her healthy fees) to fight this case. That would then mean I would once again be taken away from clients to answer calls, I’d be working when the shop was closed, and I’d have to gather information to fight a legal battle in my spare time.

The PEO, on the other hand, would have done the following for me:

Compliance help from a PEO

• Help create my employee handbook
• Provide all paperwork that needs to be signed indicating each employee understands all policies (Stratus HR actually provides all of this paperwork electronically, so employees just need a link to start electronically signing their life away, not a stack of papers that might eventually get lost)
• Retain electronic copies of all signed paperwork so I could access them whenever
• Provide guidance on workplace policies and ensure my new-hires signed each one

Discrimination and harassment help from a PEO

• Help draft workplace harassment policies and guidelines
• Conduct trainings for my employees and managers (so we don’t get into trouble in the first place)
• Launch internal investigations regarding harassment allegations and complaints

Termination help from a PEO

• Provide guidance regarding procedures and policies (so I don’t get hauled into court)
• Ensure termination-related paperwork is completed
• Distribute COBRA information (if applicable)
• Cut the final paycheck for the former employee within the state-regulated time frame
• Be there to provide advice whenever I questioned if I was doing the right thing

In other words, I could have made a call to my PEO and found the advice and assistance I needed without any of the hassle... or extra legal fees.

What a PEO does for small business

PEOs are great at doing payroll, but they also do so much more for a small business. A really good one (like Stratus HR) is going to work in the shadows so you don’t even realize they’re there. You just see that everything is running smoothly and you know exactly who to call whenever there’s a question.

In my own business, if I had worked with a PEO, I can’t even begin to calculate how much extra time I would have had to focus on the business itself rather than employment issues. And I would have gotten everything right the first time -- no guessing, no mistakes. That could have made all the difference for me and my business. And I probably would have seen my family a lot more, too.

Is outsourcing right for your business? Find out today! Let Stratus HR give you a free quote customized to your specific needs by booking a consultation.