5 Tips to “Exit” a PEO Effectively & Efficiently

Let’s face it, most employers do not think about their Payroll Data until they need it for an Audit, Lawsuit or a Former Employee is requesting information. 

Access to Payroll Data becomes even more important if you have been with a PEO (Professional Employer Organization) for many years and are looking to leave.  

The more organized your data is, the easier it will be to Exit a PEO, below we have provided 5 Tips to assist with your PEO Exit.  

The most important thing here is to make sure your Payroll Data is backed up. Leveraging a 3rd Party Payroll Data Back-Up Service will provide you with the Mobility, Agility and the Peace of Mind that your current data has been “scrubbed” and your Historical Data is safely retained. 

Identify your team members who will assist with the transition.  Ideally, your Payroll Manager has experience with multiple payroll systems and if not, encourage them to sit in on an HCM Training Class.  

You will also need an HCM Project Manager, one who takes accountability for the entire implementation and who is comfortable in all aspects of Payroll, Time Labor, Benefits & HRIS. 

This person will be hard to come by, and we encourage you to engage a 3rd party HCM Implementation Expert to assist.  Most employers attempt to tackle it with their own team members who do not have the expertise and experience, which leads to frustration and a sub par implementation. 

As for your Implementation Timeline, plan on at least 2 weeks per module. Most providers will tell you no less than 6 weeks and as long as 12 weeks.

This seems obvious but 9 out of 10 employers that come to us do not have recent proof of their Federal Tax ID. 

90 to 120 days out from when you wish to leave your PEO, get on the phone with the IRS, Business & Specialty Tax Department, 800-829-4933, and ask them to Mail, Fax and/or Email a letter with the name of your entity and the Federal Tax ID #. 

If you have employees work “out of state”  you will need to register your company in that state for State Income Tax Withholding (if SIT is required in this state) and State Unemployment Tax ID (SUI).  I highly recommend using a 3rd Party State Tax ID Registration Assistance Service and start this process early, at least 90 days prior to your go live date.

When you “Exit” a PEO, this is the time to “Do it Right”.  Move to a Human Capital Management platform that will scale with your organization. 

Use this time to clean up, overhaul, and/or create such things as your Organizational Chart, Job Descriptions, and your Recruiting, Hiring and Onboarding Processes and as well as your Performance Review Practice.

Most importantly, this is the time to evaluate where you still have “Paper” in your HR processes and commit to ELIMINATING it from each and every HCM Module.  

Paper is a major “COG” in the Employee Lifecycle, remove it, and allow the system & your team members to get the data over to who needs it,efficiently and securely,  i.e. Payroll, Benefits Administration, Insurance Carrier/Broker, Workers Compensation, and the 401k TPA/Recordkeeper/advisor, etc…