Introduction to HR Outsourcing Using a PEO

When you start a business, there's usually not much to human resources – you are your human resources. Well, you and maybe some family, friends, or former colleagues you've managed to bribe into indentured servitude for a cut of the fortune you plan to make.

But if your business is successful, you start hiring real employees. Hiring takes more time and effort than you imagined. Not only that, but these new employees require more care and feeding than did your buddies. As you add more employees, the workload mounts: orientation and training; keeping tracking of hours worked, vacations, and sick days; procuring and managing health insurance programs and other benefits such as flexible spending and 401(k) programs; terminating employees; and keeping up with general employment law as well as the rules and regulations that apply to your specific industry.

"Depending on how fast you're growing, human resources can get out of control real fast," says Gail Pierce, who has handled HR for several startups and is now CFO of Newmerix, a software company with 40 employees.