Startups face unique challenges, including the need to have employees wear multiple hats. Some of these employees may take on additional responsibilities that they are not qualified for to help the company. It’s a noble effort but could end up costing the business both money and reputation.
HR is one such area that requires detailed skills and intense knowledge. From attracting top talent to scaling up, outsourced HR for startups may be the solution you need to help your new company stay compliant and competitive.
Outsourced HR for startups is a solution that provides your company with HR support and guidance. For years, providers have shown that HR outsourcing works. It might not seem like HR is a priority for startups, but there are many areas where HR is necessary and can help shape the direction of the company. For startups, you have a few HR outsourcing options.
A payroll processor is a company that provides your startup with payroll services. There are many problems with doing payroll in-house, mainly because of the amount of time it takes to complete. Doing nothing but payroll makes this an attractive option if all you need is help with your payroll. But that’s all they offer, and they can’t even remit your payroll taxes. That’s something you need to do on your own.
Administrative Services Only (ASO) provides payroll services plus some additional support. HR outsourcing with an ASO gets you help with finding workers’ comp insurance and employee benefits. An ASO won’t help you lower your costs, and you’ll still be responsible for your payroll taxes.
A Professional Employer Organization (PEO) provides the most comprehensive HR outsourcing for startups. A PEO not only manages your payroll and assumes liability, they also help you save money on employee benefits like health care and workers’ compensation.
Outsourcing HR for startups has many advantages for booming companies. Here are the top seven.
Payroll is a headache. Calculating hours and wages, along with tax remittance can make even seasoned payroll specialists go cross-eyed. With a PEO, this is all handled for you.
Workers want competitive benefits, and it will be easier to attract those high-quality employees to your team when you can offer them a best-in-class benefits package. Your PEO helps by enabling access to their master benefits plan, which gives you Fortune 500 benefits at Fortune 500 prices. These competitive benefits can help attract and retain top talent in your industry.
HR administration can be mundane and burdensome. Updating employee handbooks, posting compliance information, managing I-9 compliance, and so much more can become the responsibility of your PEO. Another big item the PEO will handle is your benefits administration, a great way to attract employees. Because your PEO also manages your payroll, this makes it easy for them to ensure deductions are accurate and timely.
As your startup grows, you’ll need to hire more employees in different positions. New HR roles will be necessary to help you keep up with demand. But hiring new employees takes time and money, two items better spent elsewhere. Instead of hiring a new and expensive HR team member, you can scale up your operations at a fraction of the cost.
Business compliance is a headache. You need to deal with federal, state, and local employment laws and regulations. Any violation could result in costly and embarrassing fines. HR employees who make even innocent mistakes can cost your startup dearly. A PEO helps to keep your company compliant by staying on top of all the laws so you don’t have to. Your PEO will also help you by working to adjust policies and procedures to keep your startup compliant.
Getting workers’ compensation insurance is a requirement for most businesses but can present costly challenges. Depending on the claims history of your company, you may not be able to find affordable rates. With a PEO, you gain access to their workers’ comp plan and their rates. This means you could see nearly instant savings from lower workers’ compensation premiums. Your PEO will also help your cash flow by making your workers’ comp plan pay-as-you-go.
Risk management is an important part of any startup. You need to keep company assets to keep your business running, especially if your margins are small. With a PEO, they can identify and mitigate your workplace risks. But they don’t stop there. They will also help prevent future risk through initiatives like a safety training program. With proper safety training for both new hires and tenured employees, your company stays compliant with industry standards. This also reduces workers’ compensation costs by lowering the number of injuries.
Competition is fierce. You may have challenges finding and keeping high-quality employees. That may be because you don’t have a competitive benefits package. Maybe you haven’t been able to find affordable healthcare plans, or you have a history of employees suffering on-the-job injuries.
Regardless of the reason, a PEO can help. For all of the reasons above, and so many more, a PEO can help your startup compete with other startup companies and larger businesses. Outsourced HR with a PEO gives your company a competitive advantage no one can ignore.