If you’re considering a PEO for your business, one of the first questions that comes up is: how many employees do you actually need to partner with one? The truth is that there isn’t a set number. Some PEOs will only work with businesses that have three to five employees, while others will work with businesses that have as few as one or two employees. Finding a provider whose services and needs match your business goals is the most important thing. These goals could include saving money, making sure you follow the rules, or making HR’s job easier.
A lot of small business owners think that PEOs are only for big companies, but that’s not true at all. PEOs offer enterprise-level benefits, automated payroll, and expert HR compliance help to businesses of all sizes, even those with only a few employees. The appropriate partner may make your back-office work easier and give you more time to focus on growth.
In this post, we’ll go over what a realistic PEO size should be, why even small businesses can qualify, and how to figure out if a PEO partnership is right for your business now and in the future.
Most PEOs focus on helping small and medium-sized enterprises, which usually have between 5 and 500 employees. Many websites for providers and buyers will show you that range. PEOs have also worked with businesses that just have one or two employees when it makes sense to do so. In summary, the industry is open to change, and each PEO makes its own regulations about who can work there.
Why is there such a difference? The PEO concept is about combining buying power for benefits, sharing HR infrastructure, and giving advice on how to stay compliant. If your organization can really use such things, it’s worth asking providers if they’ll work with you even if you don’t have a lot of employees. A lot will.
When you start looking around, expect to see one of these patterns:
The next step is to make a short list of a few providers and ask them directly about their PEO employee needs and onboarding terms.
Just because you have a small firm doesn’t mean you don’t have to conduct HR work. If anything, those jobs are harder because you have to do more than one item at once. Here’s how a small business might benefit:
Yes, but it depends. Some PEOs will work with a one-person business as long as that person is a full-time W-2 employee and the employer can show that the arrangement is cost-effective. If you are the only employee and you are not paying yourself as a W-2 worker, the situation may be more complicated.
When you ask providers about peo for one employee, be ready to explain:
A PEO will respond yes or no based on such details. A few smaller PEOs and specialist providers say they can work with very small employers if the perfect fit is found.
Here is a short checklist to make this fast and practical:
If the provider’s PEO eligibility requirements look like a good fit after this quick pass, move forward with a trial or an initial consultation.
There are situations where a PEO is not the best next step:
If you own a business in Connecticut, even if you only have a few employees, don’t let the thought of “needing to be bigger” stop you from looking into how a PEO partnership could help you. For more than 30 years, OEM America has helped small and medium-sized businesses save money, streamline HR, and find real growth by managing their employees better.
Not only do companies with hundreds of employees need competent HR help. OEM makes big-company resources available and inexpensive for small teams, so you can spend less time on paperwork and more time running your business.
Are you ready to start? You may save up to $1,000 per employee with your own free time and motion study (worth $10,000). Book a meeting today to find out how much you could save. OEM America is a proud member of NAPEO and a BBB-accredited business. We want to help Connecticut firms construct teams that are smaller and more productive. To get in touch with an expert today, call 860-528-5555 or fill out the contact form.
A: There is no single minimum that works for the whole industry. Some PEOs will only work with businesses that have at least five employees, while others will work with enterprises that only have one or two W-2 employees, depending on the amount of service and benefits needed. Always ask the supplier what their PEO employee requirements are.
A: Some PEOs will work with a one-person business if that person is a W-2 employee and the partnership is cost-effective. Be ready to talk about your strategies for progress and your ambitions.
A: Ask about the minimum number of employees needed, which positions are eligible for benefits, how to enroll, how much it costs per employee, how to handle workers' compensation, and recommendations from clients who are similar to you.
A: PEO clients frequently have greater access to benefits, more aid with compliance, help with hiring, and less paperwork, which lets business owners focus on growth. Studies in the industry also reveal that organizations that use PEOs have higher metrics for survival and growth.
A: Some PEOs don't cover hourly, blue-collar, or trades jobs because of the intricacy of workers' compensation underwriting or state regulations. Talk to suppliers who have worked in your field before.