Banishing the Boring: Outsourcing Paperwork to PEO’s

Banishing the Borings: Outsourcing Paperwork to PEO's | Centripetal Consulting Group

Every successful business is built on a dream. Of course the dream itself may vary wildly in both scope and in substance. One man’s dream may rest atop the precarious spike of a Wall Street ticker; another man’s dream might just involve crafting the best cheeseburger in town. Whatever that initial impetus may be, the eventual shape that dream takes is often in the form of a small business, a startup, and almost always set in motion with little more than willpower and a set of rugged bootstraps.

Welcome to the exciting world of small business.

Over half a million new businesses open their doors every month. Of course, not every dream-turned-business reality can withstand the rigors of the market, but with a solid business plan, impeccable timing, and a dash of luck, any motivated person, in theory, can be the next Bill Gates, Michael Dell, or Steve Jobs. Any creative kid with an internet connection and access to Etsy could start their own home business. Any stay-at-home mom could be a breakfast nook entrepreneur. Each and every one of these scenarios, real and imagined, all echo a familiar theme of hope, passion, and hoping that a specific passion might just be converted into cold hard cash. It’s all big picture, lofty goals, and dreams.

That is of course what most small business owners imagine minutes before being buried under an unending mountain of paperwork.

Death By A Thousand Papercuts

Of course, what no one likes to think about or talk about are the boring foundations that make dreams possible – that is to say, ensuring compliance with whatever bureaucracy happens to be knocking at the door at the end of each fiscal year and pay period. While it’s nearly impossible to quantify how much time small business owners spend on all local, state and federal paperwork, we do know this: In 2003, the U.S. Small Business Administration’s Small Business Paperwork Relief Task Force found that each year, businesses and citizens expend $320 billion and over 8 billion man-hours satisfying paperwork requests from the federal government alone. Each subsequent administration since the Clinton administration has only increased the regulatory burden, according to an analysis by the George Washington University Regulatory Studies Center. By far, tax preparation consumes the most time and resources. Small business owners spend $83.69 an hour complying with the Internal Revenue Service (IRS) – a number that can reach $100 per hour for firms employing ten or more people.

That’s a lot of money.

According to NFIB data, compliance costs amounted to over $1,500 per employee for these small businesses. On an annual basis, U.S. businesses spend about $95 billion on tax-related work. Of course, that’s only the paperwork associated with one federal agency. Business owners also have to contend with other federal agencies, and a web of conflicting local and state government paperwork.

And boy is there a lot of paperwork to get through.

The Perils of Paperwork

Paperwork is no laughing matter. Like a boxer just waiting for the opportune moment to deliver you a knockout punch, misfiled, mis-filled, and misplaced papers can cause massive headaches down the road, and a black eye for a firm’s finances and reputation. In worst-case scenarios, a seemingly harmless paperwork mishap, for example accidentally un-filed IRS tax forms, could be a knockout for many small businesses after the costs of auditing, litigation and settlement.

That’s why PEO’s are a critical component in the small business space. They provide the crucial service of dealing with the “boring” for small businesses, resulting in increased competitiveness, employee satisfaction, profitability, and ultimately, success.

The PEO Solution

Professional Employee Organizations, or PEO’s, assume and manage personnel responsibilities such as payroll, providing and administering benefits, training, making routine tax payments, complying with state and federal employment laws, and a whole host of other HR incredibly important, but also incredibly opaque details. In many cases, they will also take on the entire recruiting and screening process, effectively providing an umbrella of services with one goal in mind: taking care of the “borings” so that you, the owner, can get back to doing the real work of leading the company.

Imagine if you had the time to do what you thought you would be doing when you took your job in the first place. It sounds farfetched, bordering on impossible. According to the U.S. Small Business Administration, the average small business owner spends between 7 and 25 percent of the workday handling employee-related paperwork. That means that up to a quarter of your day is spent mindlessly sifting through forms and filings.

But by partnering with a PEO, all of that boring desk work is outsourced to professionals. Imagine if in one decisive move, you could: reduce personnel paperwork, attract more qualified employees, provide more and better HR services, eliminate costs associated with mishandled paperwork and noncompliance, and most importantly of all, gain valuable time to focus on your core business. According to the official PEO trade association, the National Association of Professional and Employer Organizations (NAPEO) “The PEO directs and controls worksite employees in matters involving human resource management and compliance with employment laws, and the client company directs and controls worksite employees in manufacturing, production and delivery of its products and services.” In essence, a PEO becomes a co-employer with you, a partner, handling many of the administrative tasks that not only hog time and resources, but also invite expensive litigation or risk government intervention if handled inappropriately.

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The Business Owner’s Guide to Banishing the Boring:

 

1. Evaluate yourself and your business

What size is your business? Chances are, if you are considering the services of a PEO, you are a small business. The U.S. Small Business Administration defines a small business rather vaguely as “one that is independently owned and operated, is organized for profit, and is not dominant in its field.” 99.7 percent of businesses fall into this admittedly broad category. To go one step further, here are questions every owner should ask themselves: How much will it cost if I don’t comply with regulations? How much will it cost to hire HR personnel to ensure compliance? How much would it cost to outsource the whole thing to a PEO? In other words, determine your human resource and risk management needs. As a rule, PEO’s can benefit smaller companies the most. An employer needs 200 to 400 workers before the purchasing power for health care and other benefits starts to equal that of a PEO’s. By aggregating the employees of many businesses, a PEO can often offer better rates on health and workers’ compensation insurance, while giving employees big-business-style benefits.

Don’t forget to determine your role as well.

Are you more interested in pursuing your company’s core business? And if so, how much time is dealing with the “boring” sucking up you and your company’s time and resources that might better serve pursuing core commitments?

2. Consider the needs of your employees

Benefits and insurance packages generally conform to economies of scale. The more employees you have, the steeper the insurance discount from providers, and the better the benefits package. That’s because the more employees that share the same “risk pool”, the lower the risk. Small businesses, by their very nature, cannot compete with larger ones in this respect, which can have a negative impact on attracting talent, employee retention, morale, and ultimately, a company’s overall success. However, by pooling resources through an umbrella employer, perks and packages available to large corporations are also made available to you and your employees as well. An HR Outsourcing resource like Centripetal Consulting Group can ensure the right benefits for your company.

3. Pick a PEO

There are a variety of PEO’s in the marketplace that range from massive umbrella corporations to highly specialized niche partners. Because a PEO arrangement is such an intimate affair, careful selection is paramount.  A good recommendation is to always consult with an HR Outsourcing resource like Centripetal Consulting Group.  

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Banish the Boring, Get Back to What’s Important

A well planned and well prepared business is a successful one. To that end, PEO’s are a great solution to one of the most pressing evils facing small businesses today: paperwork.

No one starts a business with paperwork in mind. Yet for many business owners and entrepreneurs, it can seem like paperwork, and other managerial headaches unrelated to the core business itself is what they expend their energy on from day to day. Rather than commandeering the businesses they set in motion, many owners, executives, and entrepreneurs find themselves chasing a stack of papers around and around and around their desks.

Nothing kills dreams faster than paperwork.

A well-planned PEO partnership lets you, the owner, get back to doing what’s important.

About Amy Grimmer

Amy Grimmer currently serves as President and CEO of Centripetal Consulting Group (CCG). Grimmer founded the company in 2007 with the concise mission to revolutionize the positive business impact that employers realize through HR Outsourcing. Both CCG clients and its HR services vendor network of HR look to Grimmer and CCG’s associates as a trusted, unbiased resource to understanding the complexity of HR Outsourcing. Grimmer’s vast knowledge of the HR Outsourcing space, CCG’s client focused approach, and the continued rapid growth in the HR Outsourcing industry are all contributing factors to the success of Centripetal Consulting Group.
 
Prior to founding CCG, Amy Grimmer served the human resource outsourcing industry in a business development capacity. Her experience spans several functional HR practice areas including HR Outsourcing Strategy, Payroll/Tax Filing, HRIS and Benefits Administration, Health & Welfare Consulting, Retirement Plans, Workers Compensation, PEO/ASO Arrangements, HR Compliance, and Recruitment Process Outsourcing. Grimmer’s prior employers include Ceridian, ADP, Aerotek, Advantec, and RSM McGladrey Employer Services.
 
Amy Grimmer exhibits extreme passion and dedication to the HR outsourcing industry and is an avid networker, author, and student of her profession. Amy has published several articles, whitepapers, and E-Books on various topics within the HR Outsourcing space.
 
Amy is a graduate of the University of Missouri and holds a BA in Communications and a BA in English. She has completed coursework for her Masters of Business Administration in Human Resource Management at Lindenwood University.

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