For many business owners, managing HR, payroll, benefits, and compliance is a major barrier to growth. That’s where Professional Employer Organizations (PEOs) come in. As a trusted advisor, understanding the pros and cons of PEOs can help you solve deeper client problems and strengthen your value in the process.
In this article, we’ll break down:
Let’s start with the big question: what makes a PEO such a powerful tool for small and midsize businesses?
A Professional Employer Organization (PEO) gives small and midsize businesses access to enterprise-level HR capabilities without the overhead. For brokers and advisors, that means stronger client outcomes, fewer compliance headaches, and a more resilient business base.
PEOs can help businesses streamline costs in areas like workers’ compensation, payroll taxes, and healthcare benefits by leveraging economies of scale and integrated administration. According to the National Association of Professional Employer Organizations (NAPEO), companies that use a PEO achieve an average annual ROI of 27%. That’s a real strategic advantage.
PEOs often help reduce overhead in the following areas:
These savings help small businesses compete for talent by offering benefit packages typically out of reach.
Employment regulations change constantly. A trusted PEO helps support businesses' compliance efforts with federal, state, and local employment regulations by managing required filings, tracking regulatory updates, and guiding best practices. This includes areas like wage and hour rules, paid leave, OSHA reporting, and Form I-9 compliance. For business owners and their advisors, this can help reduce risk, time investment, and stress.
Beyond compliance and cost, one of the biggest upsides is operational leverage. With a PEO, businesses get direct access to experts in HR, benefits, safety, and payroll without having to hire and manage each role. That’s especially critical for growing companies that can’t justify a full internal team but still need smart, fast answers.
When clients get this kind of support, their business grows stronger, and the advisor becomes part of the solution. This creates a natural bridge to the next question: what challenges should clients expect when working with a PEO?
While PEOs offer substantial benefits, they’re not a perfect fit for every business. Advisors should be able to articulate the tradeoffs, especially for clients with unique control, cost, or data concerns.
The most common hesitation comes down to control. In a PEO relationship, the client and PEO operate under a co-employment model. This can raise questions like:
The business still hires, manages, and controls employees, while the PEO typically handles payroll processing and certain other employment-related responsibilities outlined in the contract.
If these roles aren’t clearly defined upfront, confusion can create friction. That’s why strong communication and a detailed service agreement are essential.
PEO pricing models vary. Most charge either a percentage of total payroll or a per-employee-per-month (PEPM) fee. For companies with very low headcounts or very simple HR needs, a PEO might not deliver enough value to justify the cost.
Also, contracts can include lock-in terms or auto-renewals. Advisors should encourage clients to:
Some businesses may prefer to manage HR internally or use an Administrative Services Organization (ASO) model instead. But for many, the added support and protection outweigh the cons. Especially when the PEO is a true partner, not just a vendor.
Next, we’ll look at how a strong PEO relationship benefits not just the client, but the advisor who makes the connection.
For brokers, CPAs, and consultants, recommending a reliable PEO is a smart move that enhances your credibility, improves client retention, and frees up your time to focus on what you do best.
When clients face challenges in areas like payroll, HR compliance, or employee benefits, you may not have the capacity (or liability coverage) to solve them directly. By introducing a vetted PEO, you become the connector to trusted, professional support. That elevates your value without expanding your workload.
Referral partners working with PEOs like BBSI have reported major gains in client retention. One agency credited BBSI with helping them retain 100% of referred clients over four years. When your clients feel supported and stable, they’re far less likely to shop around.
By bringing a PEO into the conversation, you stop being just a broker or advisor, and you become part of the client’s long-term strategy.
Not all PEOs operate the same way. BBSI sets itself apart through its high-touch, locally supported service model that directly benefits both clients and the referral partners who recommend them.
Unlike national providers that centralize support through remote hotlines, BBSI builds relationships through in-market teams. Each client is assigned a dedicated group of professionals in HR, risk, payroll, and business strategy. These specialists meet face-to-face, not just through screens, to help businesses navigate challenges in real time.
BBSI’s referral partners report measurable outcomes. Our clients are comfortable with as their preferred PEO partner for local hands-on support.
Put simply: BBSI doesn’t replace your role. We strengthen your role in your clients’ success.
PEOs can deliver real advantages like cost savings, compliance support, and operational capacity, but they aren’t one-size-fits-all. Knowing when and how to recommend a PEO makes you a more strategic and trusted advisor. For partners who want the benefits without the red tape, BBSI offers something different: a local, engaged team that helps you and your clients succeed together.
Looking to build stronger relationships, boost retention, and expand your reach? Let’s talk about what a BBSI referral partnership could do for your business. We’ll handle the HR. You take the credit.