As an employer, you probably realized that offering quality benefits helps you attract and retain the best employees. No doubt you're also aware that offering competitive benefits can be expensive. To meet this challenge many businesses turn to a Professional Employer Organization (PEO). Growing companies have discovered that by using a PEO they can provide comprehensive employee benefits while remaining well within their budget.

When you work with a PEO your employees are co-employed, meaning that the PEO shares the risk and responsibility of employment with you. While you're growing your business and managing your company's day-to-day operations, the PEO is behind the scenes filing payroll taxes, administering employee benefits and managing any worker's comp claims (among other things).

Because PEOs can work with hundreds of small businesses they're able to negotiate deep discounts on workers' compensation insurance and benefits (such as group health care) plans. They can then pass these savings to each client company and their employees, often providing a variety of benefit options at a lower rate that the client company could obtain on its own.

In addition the cost of the benefits themselves the PEO also administers the benefits, managing the paperwork, enrollments and benefits-related questions. By working with a PEO, you not only save money on the benefits themselves, but also save time by working with an outside expert to properly handle benefits administration. This combination can add up to a significant savings of both time and money, which you can put toward building your company as opposed to administering benefits.

Before you begin looking for a PEO, however, you want to spend some time thinking about the kinds of benefits you would like to offer your employees. Ask: What benefits are you currently offering? What do your employees value? What are you willing to contribute to benefits (such as 401(k))?

The obvious benefit choices are medical insurance and retirement plans but most PEOs will also offer a range of additional benefit options. These may include life insurance, Medical Savings Accounts, Vision and Dental coverage and short-term disability insurance.

When reviewing PEO options keep in mind that with almost 700 PEOs in the United States you have plenty of choices. It also means you'll want to spend time finding the right provider.

For instance, some PEOs offer only high-deductible health insurance plans, while others offer a variety of health options including traditional HMO and PPO plans. Some offer flexible-spending accounts like Medical Savings Accounts, while others don't. In short, determine what benefits you want to offer and look for PEO that can provide those specific benefits.

Working with a PEO can help you control the cost of employee benefits and reduce time spent on benefits administration - but with so many options, what's the best way to shop for a PEO?

Once you've determined what you require in terms of benefits develop a list of basic requirements and use this list to identify four or five PEOs. From there you want to present each PEO with the same Request for Proposal (RFP) in order to obtain detailed pricing and services offerings. The RFP will allow you to compare their offerings and pricing on an apples-to-apples basis.

If you currently offer benefits, make sure you have a clear understanding of what your costs are before you meet with PEOs. Then, when speaking with the PEOs, be sure to ask questions - lots of them. It's far easier to address costs or gaps in their service offering before you sign a service agreement rather than after.

You can find PEO companies on the Internet, in your local yellow pages, or through a specialized HR services website such as HRrates.com. At HRrates.com you can request quotes from multiple PEO providers that meet a specific set of service criteria which you define.