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Let a pro handle benefits
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July 23, 1998: 2:39 p.m. ET
PEOs can ease personnel hassles and provide your staff with better benefits
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NEW YORK (CNNfn) - Businesses with fewer than 100 employees spend as much as 25 percent of their resources handling management and personnel matters, according to the Small Business Administration.
But a fast growing industry is taking on these management hassles, while offering small business employees better benefits.
Professional Employer Organizations are managers hired by small businesses to oversee payrolls, pay taxes, advise on hiring and firings and even administer health and 401-k plans. Because PEOs manage the operations of numerous companies, they get volume discounts for benefits.
Those cost savings to a company can offset the expense of PEO services, averaging three to five percent of payroll.
Sal Carfaro, who runs his own auto repair business, turned to a PEO after helping one of his seventeen employees get a green card two years ago. An administrative mistake in the process cost his business dearly.
"They found a few infractions which generated a fine of $5,000. Those costly fines really hurt our bottom line," said Carfaro, chairman of Carfaro Collision Center.
Small business owners don't cede control to a PEO, but power sharing clearly exists. PEOs, for example, will bow out if a small business owner refuses to heed important advice.
Only 2 percent of U.S. small business owners currently take advantage of these management services. But the 1800 existing PEOs are seeing business grow nearly 30 percent a year.
"With unemployment at 4.3 percent nationwide it's hard to find employees and bring them on. You probably need health care, you need a good 401-k program. You need workers comp. We can do that for you," said Charlie Craig, chairman of the PEO Staff Leasing. "We allow you to compete, to hire and maintain the best employees." 
-- from staff writer Kitty Pilgrim
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