PEO in Arkansas [2024]

A professional employer organization (PEO) partners with businesses to reduce the burden of their administrative HR demands—typically, by streamlining and automating common HR processes like payroll services, benefits administration, compliance management, and workers’ compensation insurance. As an added benefit for small to mid-sized businesses, they can also provide employees with access to better, more affordable benefits.

If you have a business based in Arkansas (or have workers who live in the state), joining a PEO can come with some big benefits—like helping you stay compliant with complex and frequently changing state and local laws, offering dedicated support and expertise on various HR subjects, and handling manual HR tasks so your business can focus on more important strategic work. From Little Rock to Fayetteville to Fort Smith (and everywhere in between), many small businesses in Arkansas can take advantage of the benefits PEOs provide.

Before you choose a PEO, though, it’s important to carefully consider your options—and you have many. That’s where this article comes in. Rippling PEO can help with everything from remote device management to automatic state tax account registration, making it easier than ever to onboard and hire people in Arkansas and across the US.

Benefits of using a PEO in Arkansas

We’ve already touched on some of the benefits of using a PEO—now, let’s explore them in more detail.

Offload administrative HR work

When you partner with a PEO, you enter into a co-employment relationship with it, meaning you and the PEO share employer responsibilities. You become the worksite employer, meaning you maintain all authority over who you hire (and let go), how much you pay them, and your business’ overall strategy and operations—like customer support, marketing, sales, and research and development.

The PEO, on the other hand, becomes the administrative employer, meaning they employ all of your workers under their federal tax identification number (EIN). This allows them to take over all employment-related human resources work, like payroll, benefits administration, and compliance work.

PEOs bring a combination of experience, expertise, established processes, and technology to the table, which allows them to streamline (and often automate) HR management. And once they take all that manual administrative work off your team’s plate, it frees up your time to focus on more important strategic work that drives business outcomes for your organization. It’s a win-win.

Better employee benefits, at a lower price

According to the National Association of Professional Employer Organizations (NAPEO), in the US alone, there are more than 500 PEOs that co-employ 4.5 million workers across 200,000 businesses. The fact that each PEO co-employs so many workers boosts their bargaining power to negotiate with insurance companies to help their client companies gain access to lower-cost benefits.

But PEOs can use these economies of scale for more than just saving money on benefits. They can also help your employees access more robust benefits plans. Most PEOs offer access to health insurance, life and disability insurance, worksite benefits, mental health support, retirement plans, commuter benefits, dependent care, and other benefits. For small businesses, it can be difficult to build such a comprehensive benefits package on your own. A PEO offers access to a wider range of benefits than small to mid-sized businesses can offer, which can help them attract and retain top talent.

The Affordable Care Act (ACA) requires all businesses in the US with 50 or more full-time employees to provide them with healthcare coverage. While Arkansas doesn’t require any additional coverage, a PEO can still help Arkansas-based businesses (or businesses who hire there) meet federal requirements by providing access to affordable health coverage that meets ACA mandates—plus other benefits to round out an attractive package to provide your employees with the perks they want and need.

Worry-free compliance with Arkansas laws

PEOs don’t just help you comply with federal laws like the ACA. They also help you maintain compliance with state-level and local Arkansas employment laws—an invaluable resource, since these types of laws can get very complex and change frequently.

Take the Arkansas minimum wage for example. The Arkansas Minimum Wage Act applies to employers with four or more employees, and requires hourly, untipped employees to be paid at least $11 per hour, which is higher than the federal minimum wage of $7.25 per hour. Keeping up with different minimum wages can be challenging, especially in the age of remote work, when you may have employees in different states with different minimum wage laws. A PEO like Rippling automatically flags minimum wage violations based on each employee’s location, ensuring you always stay in compliance with local laws.

But PEOs can offer compliance support for much more than just wage laws. They also help with:

• Payroll regulations, including classifying employees and contractors correctly; issuing and filing tax forms; reporting, collecting, and depositing payroll taxes with the correct authorities at the right times; and complying with other wage laws, such as overtime requirements
• Benefits laws, including federal laws like the Affordable Care Act (ACA), COBRA, FSA, HSA, and any other benefits-related regulations that apply to workers in Arkansas
• Labor laws, including supplying workers’ compensation insurance, helping you follow Equal Employment Opportunity (EEO) laws, and displaying state-required labor posters

Businesses can face costly fines and penalties for violating any of these laws. The IRS estimates that as many as 40% of small businesses pay payroll penalties each year. Joining a PEO and taking advantage of the compliance support services it offers can help ensure your business doesn’t become one of them.

Dedicated support team

PEOs are dedicated HR experts. By joining one, you gain access to their expertise, which is especially beneficial if you run a small business that doesn’t have a dedicated HR team or internal experts of its own. While a PEO can help you save time and money by taking on the manual work of running your HR processes, it can also guide other areas of HR. If you need to streamline your benefits administration, write your first employee handbook, create a training program for managers, review your organizational safety practices, or tackle another HR obstacle, your PEO can help.

What to consider when evaluating a PEO service in Arkansas

Arkansas is home to many PEO providers you can choose from. 

When evaluating the different Arkansas PEO companies, consider the following criteria to help you narrow down the field:

• Your business needs. First, ask yourself what you need from your PEO. Most PEOs offer some combination of these common offerings:
• Payroll processing
• Tax filing and compliance
• Benefits administration
• Recruiting and onboarding
• Safety compliance and risk management
• Time and attendance tracking
• Regulatory compliance
• HR outsourcing services
• Your budget. How much can you spend on a PEO? Different PEO companies use different pricing structures, though the two most common ways for PEOs to charge for their services are flat fees per employee or a percentage of each payroll run. Don’t forget to think about the future—if your business and worker headcount grows, consider how that may impact the cost of the PEO.
• Experience and reputation. Is the PEO well-regarded in your industry? Has it worked with other businesses like yours? Has it worked with other businesses in Arkansas? Check review sites like G2 and Capterra to see what current and former client companies say about their experience working with the PEO.
• Benefits. What kinds of benefits can the PEO offer your employees access to? Do the quality, range, and affordability of benefits plans align with what your employees want and need?
• Benefits renewal rates. How much will benefits costs increase after the first year? Is the PEO transparent about it? These are questions to ask when shopping for a PEO, since some of them jack up their benefits renewal rates after the first year, sticking companies with unexpected cost increases or forcing them to find a new option. Look for a PEO that’s upfront about its renewal rates so you know what future costs to expect.
• Integrations. Does the PEO’s technology integrate with the systems and tools you already use?
• Does the PEO specialize in certain industries? If your business is in a niche industry, you may want to seek out a PEO that has experience in that field.
• Does the PEO specialize in certain legal or compliance issues? If your business needs to address specific legal issues, like meeting certain federal or state requirements, a PEO with specialized experience might be best suited to help you.
• Your exit strategy. At some point, you may decide you want to leave the PEO, either because you want to bring your HR operations in-house or because you decide to go with a different solution. Many PEOs are difficult to leave—they make you painfully rip out their systems and start over from scratch to replace them. Investigate what it’s like to leave any PEO you consider so you don’t end up stuck.

Why Rippling PEO is the right choice for your Arkansas business

Rippling PEO is the first of its kind—it syncs HR, IT, and Finance in one platform, making all your busy work simple and streamlined, from remote IT and device management to onboarding new employees in just 90 seconds. Most PEOs run on software that was built in the 1980s, but not Rippling—it’s a modern software solution that’s lightning fast and easy to use.

Rippling handles all your critical compliance tasks, from automatically flagging minimum wage and overtime law violations to setting up and maintaining state and local tax accounts on your behalf. And it provides you and your team with access to Fortune 500-level benefits at affordable costs.

With Rippling, you get:

• HR, IT, and Finance in one platform
• Powerful and customizable reporting on any employee data
• Tools for managing remote teams, including state and local tax registration, paperless onboarding, and app and device management
• Access to superior benefits plans, plus below-average, predictable renewal rates
• Automatic flagging for federal, state, and local compliance infractions, along with recommended plans to fix each one
• Automated risk management processes, including ACA and COBRA administration, anti-harassment training, and sending digital labor law posters to your employees
• Access to hundreds of HR resources, guides, and templates

With Rippling, if you ever decide to move HR in-house, it’s easy to do—without the painful switching process most other PEOs require. All you have to do is switch off the PEO and move seamlessly to our all-in-one workforce management platform. All of your HR, payroll, and employee data stays in your account. Your integrations stay intact. And your employees can keep using Rippling with the same login information so there’s no interruption or new processes to learn.

FAQs about PEOs in Arkansas

What is a PEO and how does it work?

A PEO (Professional Employer Organization) is a firm that provides businesses with comprehensive HR solutions, such as benefits administration, payroll, and workers' compensation insurance. A PEO works by establishing a co-employment relationship with a company's employees, which allows the PEO to become the legal employer for tax purposes and take over those manual HR processes in order to streamline them.

How does a PEO arrangement affect control over my employees?

In a PEO arrangement, the control over your employees is typically divided between your company and the PEO, but it's important to note that the primary operational and managerial control remains with your company. You’ll still have full control over day-to-day operations and business management. The PEO will take over HR functions and employment-related HR work.

What is a Certified PEO?

A Certified PEO (CPEO) is a PEO that has met and satisfied criteria set by the IRS pertaining to its background, expertise, finances, and reporting. Getting certified is a voluntary process, and it doesn’t mean the IRS has endorsed the PEO—just that the PEO passed certification assessments. In the past, certification meant a PEO could offer certain tax benefits to the businesses it partnered with. Today, however, the benefits of PEO certification are largely obsolete.

What size company can benefit from a PEO?

Companies of various sizes can benefit from partnering with a PEO, but the advantages are particularly notable for small and mid-sized enterprises (SMEs). This is because small businesses often struggle to offer competitive employee benefits. PEOs can provide access to a broader range of benefits at more affordable rates due to their pooled buying power.

How does a PEO charge for its services?

PEOs typically charge for their services in one of two ways:

• Percentage of payroll
• Per-employee per-year (PEPY) or per-employee per-month (PEPM)

Both pricing models typically include the full suite of services offered by the PEO, such as payroll processing, tax administration, HR support, compliance management, and access to employee benefits. Keep in mind, though, that these aren’t the only pricing models that exist, and different PEO service providers may have different pricing structures than these.

What is the implementation process and how long does it take to go live?

The implementation process for partnering with a PEO can vary depending on the complexity of your business and the PEO's processes. Here's a general overview of the process and timeline:

• The process begins with a consultation where the PEO assesses your business needs, discusses services, and reviews your current HR and payroll processes.
• The PEO collects detailed information about your employees, including payroll data, benefits enrollment, and other HR records.
• The PEO sets up their systems with your company’s data, integrates their software with your systems if necessary, and ensures compliance with all relevant laws and regulations.
• The PEO onboards your employees into their system, which may include enrolling them in benefits programs and introducing them to the PEO's HR policies and procedures.
• PEO experts provide training to your management and staff on how to use the PEO's systems and understand new processes.
• Once everything is set up and everyone is trained, the PEO officially begins managing your HR tasks.

In total, the implementation process can take anywhere from a few weeks to several months.

Are PEOs regulated?

Yes, PEOs must meet both federal and state regulations. Many also choose to pursue accreditation from industry organizations to further boost their credibility.

Are PEOs in Arkansas required to have special certifications or licenses?

Yes. In Arkansas, PEOs fall under the legal definition of employment, staffing and talent agencies, which are required to obtain a license from the Arkansas State Department of Labor. This license must be renewed periodically, and may also require the PEO to demonstrate financial stability.

What happens if I want to terminate my relationship with a PEO?

With most PEOs, if you want to end your relationship and move HR in house or try a different solution, you have to remove all the PEO systems from your business—which means you then need to find new systems (from scratch) to replace all the processes the PEO handled for you, from payroll to benefits administration, compliance, and more. This process can be painful, inefficient, and disruptive.

With Rippling PEO, all you have to do is switch off the PEO and move to our all-in-one workforce management platform. All your systems, data, and integrations stay intact.

In what states is Rippling PEO available?

Rippling PEO is available in all US states.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.