How to Choose a PEO or US Payroll Provider: 9 Questions to Answer

For companies looking to reduce administrative burdens, ensure payroll compliance with ever-changing regulations, and enhance employee satisfaction, knowing how to choose a PEO (professional employer organization) or payroll provider should be a top priority.

While a payroll provider specializes in various aspects of payroll processing, the right PEO offers a broader range of services, including HR administration, benefits administration, risk management, and compliance.

These solutions can help streamline internal processes, such as calculating and paying payroll taxes, and help companies cut costs. Consider the following factors during your PEO evaluation.

1. How scalable and flexible are the services?

As your company grows and evolves, your software and tools must keep pace. To future-proof your investment, partner with a PEO or payroll provider that adapts to your changing HR needs. Here’s what to look for:

• Ability to handle a growing number of employees as you onboard and manage new hires
• Infrastructure to support geographical expansion 
• Service customization to choose the specific functions you need
• A reporting function that can handle an increasing volume of data
• Benefit options that can be tailored to the evolving needs of your employees
• Compliance experts to help you navigate changes in local, state, and federal employment laws

Consider a platform that enables you to run payroll locally and globally to facilitate domestic and international business growth, and consolidate PEO costs.

See also: How to Find Top Global Payroll Providers for Your Company

2. How much manual work is required?

Selecting a payroll provider or PEO with automated workflows reduces the amount of manual labor involved in payroll and HR services. 85% of employers that use automation say it saves time and increases efficiency, eliminating time-consuming tasks such as document collection, payroll calculations, and pay slip delivery.

Automated processes can also increase your team’s accuracy and compliance as errors are reduced and consistency is ensured. This is especially beneficial for data reporting and analytics, as it results in precise, standardized reports that provide your team with clear and valuable insights into payroll costs, employee performance, and more.

Your platform of choice should also feature automated self-service options that allow employees to access and update personal information, view pay stubs, manage benefit enrollment, and submit requests for time off. You should also be able to streamline workflows via integrations with other software, such as accounting software or applicant tracking systems.

See also: 9 HR Processes to Automate Today (And How to Do It With Deel)

3. How comprehensive are their benefits packages?

Benefits management and administration are standard PEO inclusions. A comprehensive employee benefits package attracts top talent and boosts employee retention, as benefits remain one of the top motivators for workplace turnover.

When implemented correctly, benefits packages enhance employee satisfaction by contributing to a positive work culture and positioning your business as an employer of choice. 

By entering into a co-employment relationship with a PEO, you gain access to a wide range of big-company benefits at a competitive cost, including:

• Healthcare benefits: Major medical, critical illness, dental, vision, telehealth, direct care
• Insurance: Life insurance, 401(k) and employer-matching retirement plans, short-term and long-term disability insurance, accident and gap insurance

The ideal US PEO will also provide support for administrative tasks such as managing ACA compliance and COBRA administration. They should also provide top-tier health insurance options and workers’ compensation coverage and handle risk management on your behalf.

Overall, the benefits provided by the PEO should align with your employees’ needs and support your overall talent management strategy.

See also: Global Employee Benefits Guide: Offer a Competitive and Compliant Package

4. Do they have in-house specialists?

Selecting a provider with an in-house team of payroll and legal specialists not only helps you navigate complex tax and compliance issues, but also enhances your day-to-day experience as a client. Here’s how:

• In-depth knowledge of payroll regulations, compliance requirements, and employment laws provides you with accurate guidance tailored to business needs
• Swift responses to inquiries and prompt resolution of complex HR or legal matters prevents delays or mistakes common with external reliance
• Consistent service quality supports a positive working relationship and allows specialists to gain a deeper understanding of your company
• Direct control over data security and confidentiality safeguards sensitive employee information and reduces data breach risks

On the other hand, selecting a provider that outsources payroll and legal expertise may lead to communication delays as information must pass through additional channels.

These providers may also have less control over the quality of payroll and HR outsourcing services, which could impact the accuracy and compliance of payroll and legal processes and introduce security risks.

5. How user-friendly is the platform?

An intuitive PEO or payroll platform will accelerate your team’s product adoption, reduce user errors, and improve the employee experience overall.

Testing the platform’s experience can be challenging without access to the PEO services or payroll provider. However, there are a few ways to work around this limitation, including platform walk-throughs.

Consider the following:

• Assess the intuitiveness of the platform navigation and whether you can find what you’re looking for quickly and efficiently
• Check for streamlined workflows and task efficiency, with the platform guiding users through each step for the required task
• Evaluate the customizability and personalization of the platform and whether the functions can be adjusted to meet your business needs
• Inquire about access to training and support resources, such as onboarding and training for your HR team
• Request a demo or trial period to experience the platform firsthand

6. What are the data management and reporting capabilities?

Choosing a payroll provider or PEO provider with data analytics and customizable reporting will help you drive meaningful improvements in your human resources operations. The right platform should provide insights into global employment costs, payroll reports, workforce trends, headcount tracking, and more. 

When exploring a platform’s data capabilities, look for:

• Standardized payroll reports across countries
• Customizable reporting options
• Real-time data access
• Ability to generate reports for specific countries, employee types, or other unique segments
• Access to salary benchmarking data and proven industry insights
• Data security and privacy practices to protect sensitive employee information and ensure compliance with data protection regulations

7. How do they protect your information?

As a business owner, you need to perform due diligence to understand the provider’s data security measures and compliance protocols. Robust and reliable security ensures that employee information is always protected, compliance with data protection regulations is maintained, and cybersecurity risks are mitigated. 

Consider the following security factors when assessing a potential PEO or payroll provider:

• Data encryption practices should be active during transit and at rest
• Internal security practices should include customizable access controls and employee training on data security
• Clear procedures and policies should be in place for handling data breaches
• The platform should undergo regular external security audits or assessments by independent third-party firms

Review the PEO partner’s accreditation status, such as membership with the National Association of Professional Employer Organizations (NAPEO). Other optional designations include accreditation by ESAC (Employer Services Assurance Corporation), being IRS certified (Internal Revenue Service), or qualifications as a certified PEO with CPEO (Certified Professional Employer Organization).

8. How responsive is their customer service?

Customer service plays a pivotal role when selecting a PEO or US payroll provider due to its direct impact on the overall experience and efficiency of HR functions and payroll administration.

A provider with responsive and efficient customer service ensures timely issue resolution, reliable support, and expert guidance, creating a smooth and satisfactory experience for clients.

Here are six steps you can take to evaluate a provider’s customer service:

• Research the provider’s reputation for customer service by reading testimonials from current clients, particularly concerning responsiveness, professionalism, and effectiveness of the support team
• Evaluate the provider’s available communication channels for customer support, such as phone, email, live chat, or an online support portal
• Inquire about their response time for customer inquiries and the availability of their customer support team
• Explore the availability of documentation, FAQs, and knowledge bases—such as Deel’s help desk—that address common queries and empower you to find solutions independently
• Review the service agreement (SLA) for details about customer support, such as expected response times, resolution times, and support procedures
• Request a trial period to experience the platform’s customer service firsthand and take note of their responsiveness and professionalism

9. How do they ensure legal and payroll compliance?

When evaluating a PEO or US Payroll provider, prioritize compliance to safeguard your company's financial stability, reputation, and long-term growth prospects.

Lapses in compliance can result in unexpected financial burdens, such as costly fines, legal actions, and the impact of reputational damage, such as employee attrition or difficulty hiring. By partnering with a compliant PEO or payroll provider, you safeguard your financial stability, avoiding unexpected expenses associated with penalties and legal disputes.

With Deel, client companies minimize their risk of non-compliance to provide a solid foundation for global operations:

• In-house experts: Deel's team of 200+ in-house tax, payroll, and legal specialists help you navigate international payroll, employment regulations, and tax compliance across jurisdictions.
• Localized contracts: We tailor contracts to align with local labor laws, reducing compliance gaps and errors in global hiring.
• Continuous review: Contracts are regularly updated to remain aligned with changing local legal requirements.
• Centralized record keeping: All documents are stored in one place, providing clear visibility into compliance status.
• Documentation compliance: Deel ensures necessary documentation for compliant team setup across different countries.

See also: Global Payroll Compliance Checklist

Simplify US payroll and HR management with Deel

Deel makes payroll and HR management easy, whether you’re hiring in one state, across the country, or around the world. As an all-in-one HR solution for global teams, Deel enables you to manage everything you need to hire and pay your workforce, all in one platform, whether you’re using our US Payroll, Deel PEO*, Employer of Record (EOR), or Global Payroll.

With a 9.3 ease-of-use rating on G2, customer testimonials have described using Deel as “a seamless experience with a user-friendly interface and advanced features that make it easy to handle complex payroll and payment processes.”

*Provided by Deel PEO US, LLC, Deel Employment Services, LLC, or through Deel's partnership with licensed providers where required.