How PEO Services Assist with Tax Compliance.
For many small- to medium-size businesses, staying compliant with business-related federal and state tax requirements can be overwhelming. Forms, deadlines, and compliance regulations can turn the process into a frenzy of paperwork and time-consuming details.
These make it easy to make a mistake or miss a deadline, which will expose your business to fines and penalties. A professional employer organization (PEO) can be the gift you’ve been waiting for. One of the benefits of a PEO is that they assume the responsibility of business tax compliance and other labor-intensive HR functions. With a PEO, you can maintain employee morale and have time to focus on running your business.
What is a PEO?
A PEO is an organization that provides comprehensive human resources solutions for small and mid-size businesses. A PEO enters into a joint employment relationship with a business and assumes the responsibility of payroll administration, employee benefits design and administration, regulatory compliance, tax administration, payroll, and workers’ compensation. The PEO is generally responsible for payroll-related functions, such as issuing W-2s, depositing employment taxes, and paying wages.
Some of the benefits of a PEO include:
- Better employee benefits
- Smoother HR experience
- Time and cost savings
- Compliance assurance
- Risk protection
- Faster market entry
- Better recruitment options
Liability for Employment Taxes – Tax Laws
The PEO pays the employees and handles employment tax liabilities with funds received from their clients. If an employee works in multiple states, the PEO handles the appropriate taxation and knows reciprocity rules to ensure proper tax calculation. Federal and state tax returns are filed for the client using the PEO’s EIN. The business owner maintains responsibility for day-to-day operations. This includes state unemployment tax, so a client of a PEO can hire remote employees without worrying about tax laws or complicated rules for opening tax accounts in an unfamiliar state.
How PEO Solutions Help with Business Tax Compliance
- Maintain Compliance with Tax Regulations and Deadlines
More than 33% of small businesses pay fines every year for making payroll tax errors. Compliance with tax regulations can be complicated for small businesses with limited resources and tax experts. Because payroll mistakes can have serious consequences, you may need a PEO to help you maintain business tax compliance.
A PEO with years of experience handling payroll functions will have a deeper understanding of tax regulations and strive to keep track of changes in regulations. A PEO will process W-2s and W-3s and manage 940 and 941 fillings. They’ll also prepare and pay all payroll-related tax returns, state unemployment returns, state and federal withholdings, and more. When you partner with a PEO, you’ll stay compliant with regulations and deadlines, which will protect you from potential fines and penalties.
- Manage Multiple State Regulations
Hiring out-of-state employees or managing employees if they move to a different state means your business will need to stay compliant with labor law and tax regulations in those states. A PEO can help you meet employment-related compliance obligations and provide your employees with the resources they need to stay productive and healthy.
A PEO removes the stress and hassle of managing out-of-state employees by ensuring your business meets the state-mandated tax requirements. The PEO will help you navigate the tax and employment law implications in every venue and keep you up-to-date with regulatory changes across those geographic lines.
- Keep Track of Employee Status Changes
Employees get married, have children, divorce, and lose dependents as their children become adults. A PEO will keep track of these status changes and update forms to reflect them.
Your PEO will handle withholdings like wage garnishment or child support from employee paychecks.
- Eliminate Paperwork Clutter
As a small or mid-size business owner with limited HR personnel, it’s easy to become lost in the maze of legal paperwork. You have to work on W2s, 1099s, I9s, SUTA, FICA, FUTA, garnishments, levies, and more.
With so much on your plate, things can get daunting quickly. Of course, the more employees you have, the more your paperwork backlog grows. You may end up spending too much time on tasks that are not meant to actively help your business grow.
A PEO has all the information and expertise needed to alleviate the liability for correctly preparing, filing, withholding, and paying business taxes. Resourcing your payroll-related business taxes will ensure you have documented all relevant information, submitted the correct forms, and met all deadlines. With the use of advanced technology, you can reduce paperwork, stay organized, and save time.
Keep Your Business Running Smoothly with Vested HR
Running a business can sometimes feel like a race against time. There are always more tasks to complete and not enough hours to get things done. When you work with a PEO, you get more time to focus on critical operations that make your business run at full productivity and thrive.
Vested HR is here to help you manage all business-related tax return preparations. We take the stress out of tax management and assure compliance and payment of all local, state, and federal taxes. Our HR experts stay up to date with every regulation that helps you reduce risk and protect your employees.
We provide flexible and customizable HR solutions delivered through a time-tested model. Contact us to learn more about our PEO HR solutions and how we can help you with business tax compliance and tax planning.