Why Startups Should Use a PEO

Why Startups Should Use a PEO

Brand new business startups full of energy, new ideas, motivation, and excitement, can still fall short of its goals given the challenges of an ultra-competitive business environment.

Challenges for Startups

Experts agree that one of the major struggles that startups encounter is attracting top talent. Startups can encounter difficulty while hiring people with the skills that are required to add value to their company. When they begin to experience rapid growth, it may become difficult to find employees that share the passion and context that the founder(s) envisioned when the company set out its journey. Another critical consideration is the time it takes to find the right people for your firm, which will inevitably be a time-consuming process – time that could be utilized on other core areas of the business.

A startup business graphicHiring a new, full-time employee can cost anywhere between 6 and 9 months’ salary. For an employee making, for example, $60,000 annually, it comes out to be $30,000 to $45,000 in recruiting and training alone. When a company spends time on recruitment, it is unable to focus on the other essential operations.

The complexity and cost of this process taking place in another country multiplies by a factor of three across the board. The majority of startups simply do not have adequate manpower, knowledge, resources, or expertise to take on the challenges of an international venture and the associated legal essentials.

Benefits of the PEO

This is where the PEO comes in.

A PEO (Professional Employer Organization) is a professional outsourcing entity that will assume the vast and complex elements of an international venture.

Reduce Payroll Burden: PEOs can handle the benefits, payroll calculations, filings, disbursements, and associated acquisitions or terminations of your new company.

Stay Compliant: PEOs are ideal for a short duration in another country where they will manage the local business law in the hiring and staffing process, allowing the firm to focus on the other key elements of their startup. An international business graphic

Offer Better Benefits: With their more developed infrastructure, PEOs can provide benefits that a smaller firm may not be able to offer on its own such as health insurance and 401(k) plans. These benefits make the company a more lucrative option for top talent which will, in turn, bring down employee turnover rates.

Reduced Liability: PEOs are also equipped to assume liability by sharing the risk of employment-related legal issues. If the startup runs into any legal trouble when it comes to hiring, staffing, or employment, legal liabilities that may otherwise destabilize a startup can now be shared or assumed by a PEO partnership.

Be Prepared for the Next Phase of Growth: When hiring and staffing of your firm are well-equipped, your international business venture is likely to be successful, and can take the company to the next level of growth. While still managing the critical HR, accounting, and payroll services, companies like Global Upside can provide your company with end-to-end services and technology when ready to move away from the PEO model.


­­­­­­­­­­­­­­­­­­­­­­­­If you think your firm may be interested in a venture with a PEO, please give our professionals a call at +1-801-821-4905 or send us an email at info@globalpeoservices.com.