Hi, I’m Patrick. Good Enough brought me on as a part-time Operations Manager who basically does all the things that Shawn and Barry don’t want to do! My first task was to set up payroll for Good Enough’s three employees, something we thought would maybe be worth talking about!
If you intend to build a serious business, you’ll probably end up hiring some people. Once you’ve gotten over the exhilarating high of finding a perfect candidate, you’ll quickly realize that hiring someone has obligated you to legal and tax compliance whack-a-mole. There’s federal, state, and sometimes local (hello NYC!) rules that need to be followed just to keep someone on the payroll (and if your new hire is remote and resides out of state, don’t forget all the rules for that state). You’ll also get the ultimate American experience of providing healthcare for people who don’t really want you involved in their healthcare experience but who often have no better option.
All of this tedious bureaucracy might really sap the enthusiasm you had for your new custom dog stroller business. Don’t you wish you could just make someone else do all the bureaucratic stuff so you can focus on the latest in dog stroller trends? Maybe you can…
PEOs - a less painful way for small and medium sized businesses to hire people
PEO’s (Professional Employer Organization) are basically companies that get paid to employ people. When you work with a PEO to co-employ your team, they take on the bureaucratic parts of hiring by acting as your team’s official employer of record and handling things like payroll, employment taxes, and compliance.
Your share of the co-employment responsibilities are all of the things that we generally think of when hiring — telling the team what to work on, setting their hours, managing their vacation time, and profiting from the fruits of their labor. That is, you get all the benefits of hiring someone with about 90% less paperwork.
An additional benefit of working with a PEO is they generally make it much more cost effective to add benefits like insurance and 401(k) plans because their much larger pool of employees gives them access to better rates. Adding those benefits doesn't force you to spend time shopping around, dealing with brokers, or sitting on hold for insurance companies – you just pick and choose the things you want to add from the available options.
And though you might expect this service to be really expensive, we find the cost to be quite reasonable (especially when compared to hiring a full-time HR person or even just the stress of doing all that work yourself each month). Good Enough chose JustWorks as our PEO and we’re paying $100/month per employee. For that price, we have access to an account manager with a name who replies to our emails and lets us call them with hiring questions and who sends us instructions when we have something we need to do. They have a team of experts on hand who give us advice on everything from our state-filing requirements to which health insurance plans we should offer. Not bad!
What else is there to know about PEOs?
I can share some of our experience with JustWorks, a company I’d suggest you consider.
- There’s some setup time. You can’t just call them tomorrow and expect them to start paying your people by the end of the week, be reasonable!
- Everything both on the Good Enough side and the employee side is done through the JustWorks platform, which is pretty well made and easy to navigate around. Your team can log-in and see paystubs and their benefits enrollments and salary history and all that stuff. They won’t hate it!
- JustWorks makes the offboarding process pretty easy if and when someone leaves the business. They guide you through compliance things and make severance and COBRA things pretty straightforward.
- Even though adding healthcare plans is easier through a platform than doing it on your own, it’s not entirely painless. We could only pick plans from Aetna, but there were 34 options to choose from and they all suffered in their own way. America!
- There’s no long term commitment to keep using the platform.
- It doesn’t eliminate all of your bureaucracy, but does eliminate most of the stuff related to hiring. Sorry, you still gotta keep your books and do your taxes and have a lawyer and stuff ok?
Is this just an advertisement for JustWorks or do you really just like PEOs?
Heh, I guess maybe this post exposed me as some kind of super nerdy fanboy. JustWorks is the PEO I’m familiar with and it’s worked great for the businesses I’ve seen use it. I’ve been part of places that didn’t use any kind of PEO and I know how much more stressful that side is–even just keeping up with constantly changing employment laws is a lot to worry about!
Starting a business is hard and offloading hard things at an affordable price is an absolute win. In my opinion you should absolutely use a PEO if you have more than 1 employee and less than 50. You won’t miss doing all that paperwork, I promise.