Every business owner should ask himself two questions that can influence how much money he has available each year as well as how much he is overspending, if he is, on his PEO:
1. How do you know immediately if you are saving money on your PEO?
2. How can you save money with the PEO that you are working with today?
In order for Business Administrative Consultants (BAC) to be able to determine the answers to these two questions, we would need to look at the complete billing report for the PEO along with your company's benefits costs in order to perform a thorough analysis on associated expenses. Then we would shop for alternatives, especially open market so that we have a baseline to determine costs without your PEO. Once the information is gathered, then BAC would place the information in a presentable format with all the options and note the costs differences for comparable alternatives. This process is similar to reviewing comparable homes when shopping for a house. You need the baseline to know whether or not you are getting a good deal.
Several points exist that BAC would want to look at and examine in order to ensure that they are in place so that the client can realize cost savings.
They include the following questions, which can be answered through a comprehensive examination of the billing report:
1- Has the PEO managed their state unemployment in a diligent manor so that the SUTA rates they charge are competitive?
2- Is the PEO honoring tax caps on SUTA & FUTA taxes?
3- Is the client getting the credit for the FICA match for section 125 employer's savings of $7.65 per $100 that the employee puts toward their own benefits? Is your current PEO giving you those savings or are they keeping them for their own profit center?
4- Is the PEO charging a competitive rates for workers' compensation based upon the current open market?
These are just a few areas you need an analysis in order to make sure you are being charged appropriately and not missing out on valuable savings. If you do not take the time to review your PEO's billing several times as year as well as compare it with other plans, you won't know whether or not their pricing is reasonable or high. It's important to utilize the above checklist in order to determine whether or not your business has access to immediate cost savings regarding its PEO.