For many small and medium sized businesses, the beginning of a new year - which is coming sooner than you think - brings a fresh budget, new ambitious goals, and a chance to improve upon the previous 12 months. It’s also a popular time to reconsider new partnerships, including whether your current professional employer organization is still the right fit. Changing PEOs can be a strategic business move, and the timing of that change can influence pricing, onboarding, and overall success.
Below are the key factors business leaders should consider when evaluating whether the new year is a good time to switch PEOs.
The beginning of the year often aligns with the annual reset point for payroll, taxes, and benefits. Initiating a new PEO services partnership during this window can simplify the process and minimize mid-year adjustments. Businesses often find that converting payroll and HR services to a new PEO is easier when everything restarts at once. This transition can even occur in as little as one month with the right guidance.
Many HR service providers offer aggressive year-end pricing and even into January. This is often due to competitive pressure as PEOs finalize their annual client rosters. For businesses interested in exploring new PEO options, this timing can provide some additional negotiating leverage. Contract timing matters as well. Some PEO contracts automatically renew, which can lock a business into another year before leaders have a chance to evaluate past performance. Reviewing agreements during the final quarter helps business leaders explore new PEO services and decide whether to move forward before renewal. Change can also happen earlier in the year than at the end of Q4. Consult with your team and a PEO broker to evaluate when it would be best for your business to switch PEOs.
While every provider schedules onboarding differently, many PEOs see lighter implementation activity early in the year. This slower traffic often means more focused attention from the onboarding team, faster setup of payroll assistance, and quicker access to HR support. This additional bandwidth can be especially helpful for companies that need more hands-on support during the transition.
There are situations where waiting until the new year is not necessary or beneficial. If serious service issues with your current PEO provider are causing operational problems or delaying growth, it may make sense to change sooner rather than waiting. Moving to a better matched PEO solutions partner can often improve critical items like payroll services, and benefits administration immediately. Delaying a necessary transition may cost more in lost time, inefficient processes, or employee frustration.
Switching PEOs at the start of the year often provides cleaner financial records, smoother implementation, and stronger pricing options. However, the right time is the moment that aligns with your business priorities. If you’re evaluating new PEO services or want to determine whether now is the best time to switch, a member of the BestFit PEO Network can guide you through the entire process and match your company with the best PEO services for your needs