A professional employer organization (PEO) is a company that handles payroll, benefits, HR and employment compliance for small businesses. It pools employees from many businesses so each one can offer the kind of benefits usually reserved for large employers. For an optometry practice, a PEO can lower benefit costs, cut hours of admin work and reduce compliance risk, while you keep running your practice and managing your team day to day.
How does a PEO work?
A PEO works through an arrangement called co-employment. You stay in charge of your practice: you hire, schedule, set pay and manage your staff. The PEO becomes the employer of record for administrative purposes, which means it:
- Runs payroll and files payroll taxes.
- Offers and administers health insurance, retirement plans and other benefits.
- Provides workers’ compensation coverage.
- Keeps HR paperwork, policies and compliance on track.
Your team still works for you. The PEO handles the paperwork behind them.
Where do the savings come from?
- Better benefit rates. Because a PEO combines employees from many businesses, it can often negotiate health insurance rates and plan options that a practice of 10 or 20 people can’t get on its own.
- Less admin time. Payroll, benefits enrollment, onboarding paperwork and tax filings take hours each month. With a PEO, much of that comes off your office manager’s plate.
- Workers’ compensation. PEOs typically include workers’ comp and can often simplify how it’s billed and managed.
- Lower compliance risk. Employment rules change often, and mistakes with overtime, classification or required notices can be expensive. A PEO keeps you current.
- Easier hiring and keeping staff. Competitive benefits help you attract and keep good technicians and opticians, and turnover is costly.
What does a PEO cost?
PEOs are usually priced in one of two ways: a flat fee per employee per month, or a percentage of total payroll. Benefits are billed on top of the service fee. When you compare options, look at the total cost, including service fees, benefit premiums and workers’ comp, against what you pay today plus the value of the time your team spends on HR admin.
How is a PEO different from a payroll service or in-house HR?
- A payroll service pays your team and files payroll taxes, but benefits, compliance and HR questions stay with you.
- In-house HR gives you full control, but it’s hard to justify a dedicated HR person at a small practice, and you still buy benefits at small-group rates.
- A PEO covers payroll, benefits, workers’ comp and HR support together, and gives you access to larger-group benefits.
When does a PEO make sense for a practice?
A PEO is often a good fit when:
- You have roughly 5 to 50 employees and no dedicated HR staff.
- You’re losing candidates or staff to employers with better benefits.
- Your office manager spends a large part of each week on payroll and HR paperwork.
- You’re opening a new location or growing your team quickly.
- You’re worried about keeping up with employment laws in your state.
What should you ask before choosing a PEO?
- What’s included in the base fee, and what costs extra?
- Which health plans and carriers are available in our area?
- How do benefit costs compare with what we pay now, for our actual team?
- Who do we call with HR questions, and how quickly do they respond?
- What happens to our benefits and records if we leave?
As a master service provider, JoinODx provides PEO and HR support alongside your website and IT, so your people and systems are handled by one team. See how we handle PEO and HR or talk to us about your team.
