Why you should consider co-employment for your small business

Is this the right fit for you?


Venturing into entrepreneurship is not an easy feat. You get to be occupied most of the time with making sure everything is going on well till you are able to find suitable hands to pass over some duties to.

Getting your business registered to begin operations is one thing, but making sure it is a going concern is the real deal. Investing a lot of money into it at the initial stage is a necessity.

So you will want to cut off any unnecessary spending that could harm your business. You will also be thinking of how to reduce costs and share some of your responsibilities. This is where co-employment comes in.

What co-employment is all about 

Co-employment is a relationship between two or more employers where all the employers have legal rights to the same employee. Having a working relationship with another co-employer as a small business owner can help alleviate the workload.

To further nurture this working relationship you can even think of fun activities, such as team building scavenger hunts or simply going out for a coffee.   

When talking about co-employment, you can’t do without mentioning Professional Employer Organizations (PEOs). PEOs enter into co-employment relationships with small businesses to help reduce their liability.  

Reduction of liability 

Since a co-employer usually takes over the client’s employment and administrative tasks, a PEO which is the co-employer will share in this liability as well.

What is in it for them is that they get to enjoy the benefits of the HR infrastructure usually found in larger businesses or organizations.

Co-employment is largely practiced in countries like Canada, India, and Singapore. Canada PEO services are readily available to small business owners in Canada.

Depending on your location and budget, you can co-employ with any Canada PEO of your choice if you are set up there.

Let us see other reasons why you should practice co-employment as a small business owner. 

Reduction in benefit costs 

 As a small business owner, partnering with a PEO service will help you save cash on major expenses like healthcare since they will provide more and better options than you will have available to you.

If you have a large employee base, a PEO may not work for you, in such cases, you can use digital tools such as an Applicant Tracking System that helps with the hiring process.

However, for a small business, PEOs can help you cut off about $2,500 out of every $6,400 which is the average cost of an employer’s healthcare plan contribution per employee.

So if you employ say 20 members of staff, your PEO will be able to shave about $50,000 off your contribution.  

Taxes and payroll are taken care of 

Starting a small business requires a lot of effort to make sure the business thrives. While trying to achieve this, you definitely don’t want to be known for breaking tax laws as it can potentially damage your company’s early reputation.

Unless you are an accountant, chances are that you may not know anything about the tax laws. You have a choice to hire a professional accountant to help you fix this, develop software outsourcing, or you can co-employ with the right PEO that can help you take care of employees’ taxes.

The PEOs will handle not just your yearly salary, but also provide payroll services and deduct the correct taxes from each employee’s wages each pay period.  

Workers’ compensation and unemployment are managed 

Once you get your small business registered, you have to pay unemployment and compensation costs. You will also be required to have workers’ compensation insurance.

The amount involved depends on the state you are resident in. Your company will get fined if you do not pay the exact amount you are billed let alone not paying at all.

A PEO will know exactly how much you are to pay and even help you verify that you are paying the exact amount.

In cases of business travel, you also need to make sure that everything is covered and your workers obtained the necessary documents, such as passports or even an international driving permit 

Final Word 

If you are a small business owner, you would have known that you get to spend a lot in the initial stages, at least till your business starts giving back to you.

Another problem you will be faced with will be how to manage your time because you will have too many things to handle at the same time.

Working with a PEO will take away most of the burden of running a company and keep you within the state and federal laws.

If you have been having it very tough after starting up your small business, consider co-employment today. 

Categories: Business Insights, Management & Leadership