Common Pitfalls When Choosing a PEO and How to Avoid Them

Selecting a professional employer organization is a major decision. The right PEO can streamline human resources functions, reduce administrative work, improve benefits offerings, and support your business as it grows. On the other hand, the wrong PEO can come with unexpected costs, compliance issues, and poor synergy with your business needs. Many company leaders assume all PEOs are interchangeable, only to later realize that not every provider has the specific systems, services, or scalability their individual organization needs. 
Before signing a contract, it’s important to understand the most common pitfalls a company might face when choosing a PEO and how to avoid those costly errors.

Mistake #1: Failing to Evaluate a PEO’s Technology and Ease of Use

Think of a PEO’s technology platform as the engine behind all of the major functions you require including payroll, onboarding, benefits enrollment, and HR reporting. When that technology is outdated or difficult to navigate, it leaves administrators and employees unable to easily access benefits information or administer the system as needed. 

Before committing to a provider, take the time needed to explore how the system works with a “test drive”. Ask to see the dashboard, how onboarding will flow, and what tools are available for administrators and employees. Look for automation, simple navigation and mobile accessibility.

Mistake #2: Choosing a PEO That Cannot Scale with Your Growth

Some PEOs are ideal for small companies with fewer than 20 employees. Others are equipped to support growing organizations with multiple locations, complex benefits structures, or industry-specific compliance requirements. If you outgrow your PEO, you might experience limited benefits options, slower response times as your workforce increases, or the inability to support multi-state hiring. Evaluate your future business needs and be sure to choose a PEO partner that can scale with you from the start. 

Mistake #3: Overlooking the Employee Experience

A PEO relationship affects more than the leadership team. Employees interact directly with the platform for critical functions like benefits, checking their PTO balance and onboarding. If these tasks are difficult or confusing, you risk decreased morale and a likely wave of questions directed at internal HR or leadership. Communicating clearly with your team, and addressing employee concerns and questions will go a long way in ensuring a smooth PEO onboarding and improve employee satisfaction in the long run.


The riskiest pitfall business owners can fall into is navigating the decision alone. With more than 500 PEOs nationwide, comparing pricing, benefits, technology, and support models takes time. That’s where the BestFit PEO Network comes in.  

Working with a BestFit-affiliated broker can help simplify the process, match companies with providers that fit their industry and growth plans and help organizations avoid the pitfalls mentioned above. 

Want to learn more about the BestFit Broker Network™?