5 Best PEO Companies in California To Work With (2021)

The state of California contains a broad array of business opportunities, from agriculture to transportation and from technology to professional services. Whichever industry your small business is in, you might have heard about the use of Professional Employer Organizations, or PEO’s, as a way to offload some of the burden of Human Resources administration.

Find the right PEO for your business, and you could save a lot of time and money while freeing up internal resources that can be otherwise used to grow your business. Before taking the leap and hiring a PEO, the first question to answer is whether or not a PEO can help you in the first place.

Does Your California Business Need a PEO?

An established business in California is subject to all of the numerous employment laws enforced by the state government. And, it’s up to the business owner to pivot if and when these laws change. This is reason number one for why a Professional Employer Organization is often hired to take on a business’ core HR functions. So, if you aren’t interested in becoming an expert in California labor law, hiring a PEO might make good sense.

There are more reasons to partner with a reliable PEO, including:

  • Easier administration of healthcare benefits and retirement plans
  • More efficient recruiting, training, and employee development
  • Fast, transparent payroll processing
  • Legal compliance

If you’ve decided that a PEO could benefit your small business, the next goal is to identify which PEO’s best suit you. Because there are literally dozens of PEO’s that are licensed to operate in California, sifting through them all isn’t so easy.

What to Look for in a California PEO

To help make sense of all of your options, it’s a good idea to match your business priorities with the strengths of the many various PEO’s you can choose from. For example, if one of your focuses is on maintaining strict tax compliance, then look for a PEO that specializes in this area. Or, if safety and risk management are most important to you, seek out a PEO that is known for providing these services.

Here are a few other things to consider during an evaluation of PEO’s that serve businesses in California:

  1. Cost. This is arguably the most common criteria business owners use when qualifying PEO’s. On average, a PEO in California will cost between $1,000-$2,000 per employee, per year. This will vary widely if additional services are included.

  2. Scope of services. Not all PEO’s perform all HR functions. Many of them specialize in ‘Core HR’ functions like payroll or benefits administration.

  3. Consulting capacity. Many small business owners in California need a PEO not just for the outsourced HR services, but for expert guidance in how to structure their employee management systems. Many PEO’s can assist with this.

Remember that partnering with a PEO should be viewed as a mid-to-long-term strategy, as it can be quite costly and time-intensive to integrate a new PEO into your organization.

Benefits of Using California PEO’s

Most small business owners have a specific goal in mind when they decide to take on a new PEO. The goal could be to save money, reduce day-to-day administration, or to streamline the hiring process.

PEO’s are structured in a way that addresses all of these goals. Many of the benefits of using a PEO in California include:

  • Reduced operating costs. The costs that a business incurs anytime a new employee is brought on board are variable and often invisible. Often, it’s not until a PEO uncovers these costs and starts removing them that business owners even realize how much they were spending in the first place.
  • More efficient workflow. When employees know where to look for the resources they need related to healthcare benefits, payroll, or tax filings, they’re naturally more efficient at their job. This efficiency translates into more value for the employer and, in the end, higher profits.
  • California labor law compliance. The many statutes and regulations governing part- and full-time workers in California are numerous and often confusing. When a business first gets started, it may seem easiest to do everything in-house. However, once employee counts start rising, labor law compliance becomes a bit tricky.
  • More transparent Human Resources operations. When you have a PEO working with you to file workers compensation claims, administer payroll, and manage 401(k) plans, you’re able to focus on tasks that are more critical to your bottom line. And, anytime you need insight into your HR operations, your PEO is just a click or a call away.

With the right PEO, California-based businesses can often go from just getting by to thriving. However, success with any PEO hinges on matching the best PEO with the companies that need specific areas of expertise.

FAQ about California PEO’s

Q: How long does it take to integrate a PEO into my business?

A: PEO integration time varies according the size and complexity of your organization. Another factor is geographical disparity of your employees. All things being equal, it can take between two weeks and three months before a PEO is considered ‘fully integrated’.

Q: How are PEO’s paid?

A: Most PEO’s deduct their fees from the monthly payroll, providing you with a statement that shows all of your PEO-related expenses. Some PEO’s do this on a quarterly basis, and all of them provide you with an annual report showing the full year’s PEO costs.

Q: How much does it cost to switch from one PEO to another?

A: Because the initial cost of setting up a new PEO is fairly extensive, costs for switching PEO’s range between $10,000 and $20,000, with larger, multinational companies paying even more. With the new PEO, it can take a year or more to recoup these expenses.

Q: Which PEO is the highest rated in California?

A: We’ve gone to great lengths to evaluate many of the most effective and best-priced PEO’s currently serving California. Head over to our state-based PEO page to learn which ones are the top ranked.

Need a PEO in California? We Can Help

Choosing the best PEO for your California business is an important decision. The good news is that we can help by providing you with the broadest selection of providers hand-selected for the way you do business.

If you’re ready to get started on the next steps for choosing the optimal PEO for you, get in touch with us today.