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How to Start a Professional Employer Organization

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A Professional Employer Organization (PEO) is a service provider that enables businesses to outsource the management of services typically provided by the business, including payroll, human resources, employee benefits, risk management, training and workers compensation. The PEO assumes all the responsibilities in those categories, and this allows the company to focus on the operational and revenue portion of its business. According to the National Association of Professional Employer Organizations (NAPEO), businesses across the nation are using PEOs due to such factors as relief from employment administration and reduced liabilities, along with access to superior employee benefits and personnel management solutions. Forming a PEO may be the perfect choice for someone looking to start a business.


Open your browser and search “PEO Start Up” in the search bar of your favorite search engine. Research the coaches and companies available to help with your Professional Employer Organization start-up business. Consider attending a seminar hosted by a successful PEO coach or hiring a PEO consultant.

Determine the amount of money you have available to create the PEO start-up company. Secure any loans that you will use in addition to savings. The start-up capital will be used for marketing and promotion of your new PEO.

Decide on a name for your start-up business. Register the new business with the government by obtaining an Employee Identification Number (EIN) from the IRS.

Create a PEO business model. Consider all PEO services including human resources, employee benefits, workers compensation, payroll administration, training and risk management. Detail the services that will be offered, taking into consideration what services are currently offered and not offered by your competitors. Determine the fees you will charge for each service.

Identify the clients who match your niche, keeping in mind that it is recommended that you focus on companies that offer benefits with full-time employees and a low turnover rate.

Hire and train employees for your PEO business. All employees should excel at customer service.

Secure reliable vendors who provide the services that you will manage for the company. Acquire several vendors in each category to ensure the best return on your investment and maintain the client’s satisfaction. Obtain any necessary PEO software that can be used for payroll and record keeping.

Promote your PEO to your targeted client base. Meet prospective clients to discuss any fees required by the PEO as well as all the services offered.


Daelyn Fortney is the co-founder and managing director of the animal rights and eco-friendly news source, This Dish Is Veg. Her expertise includes animal welfare, vegan and vegetarian nutrition and health and wellness. In addition to her work at TDIV, Fortney writes for and various other websites.

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