How a PEO will assist with HR tasks, Payroll, and tax planning.
It can be hard to stay on top of administrative tasks like payroll and taxes in your business, especially if you have a small team and focus on your core operations. Fortunately, you don’t always need to do all the work yourself. Should you need assistance with managing your finances and doing HR work, you can partner with a Professional Employer Organization (PEO).
PEOs have been around for many decades now, helping small- and medium-sized businesses manage their HR needs like workers’ compensation and benefits, payroll, and taxes. With their assistance, you can focus more on growing your business since you won’t need to spend all your time accomplishing administrative tasks.
Get to know more about the benefits of partnering with a PEO, what PEOs can help you with, and why you should work with a PEO.
PEO Relationship and Agreement
Should you decide to partner with a PEO, you’ll enter into a Client Service Agreement (CSA), declaring the PEO as a co-employer; this means that your employees will be listed under the PEO for tax purposes like withholding, reporting, and paying taxes. However, as the business owner, you will remain the worksite employer and retain the right to hire and fire your employees.
Services fees may vary across providers, but PEOs generally charge a certain percentage of your employees’ salaries–typically around 2-12%.
What Can PEOs Do for Your Business?
At its core, a PEO assists with relevant HR tasks, which include the following:
PEOs will manage your employees’ payroll and take charge of all the processes involved. They will handle all these matters for you, from calculating paychecks to paying employees to file and depositing taxes.
Similarly, PEOs can design and develop a benefits program for their employees, ensuring adequate coverage. They help you gain access to benefits like health and life insurance, dependent care, 401(k) retirement plans, disability insurance, and many others, even if you are just a small company. In most cases, you can also get better rates based on how many employees you have on your team.
A PEO will usually provide workers’ compensation insurance to protect your employees if they get injured or ill. This policy will also protect you, as an employer, from potential liabilities during these situations.
Tax Filing and Reporting
PEOs will help you with all your tax duties, which involve handling and submitting the necessary documents within assigned deadlines. Common paperwork includes:
- Form W-2 (Wage and Tax Statement) – Reports wage and salary information for employees
- Form 940 – Reports your annual Federal Unemployment Tax Act (FUTA) tax
- Form 941 – Reports income taxes, Social Security taxes, and Medicare taxes withheld from employees’ income
- Form 1095 (Affordable Care Act)
Why Should You Work with a PEO?
Working with a PEO comes with significant advantages for your business. The most apparent will be the convenience and reduced workload. In addition, with a partner doing all the HR tasks on your behalf, you and your team can focus more on other key activities in the business.
With that said, it’s important to note that even if PEOs take over the HR work, you’ll still have responsibilities that need to be fulfilled on time. These include sending in employee timecards or benefit forms to ensure that the organization can process its payroll and benefits accordingly. However these shouldn’t take much of your time or effort.
Additionally, while some may think that it’s more expensive to hire a PEO, the truth is that you’d save more money in the long run. Having an in-house HR team will incur more costs since you’d need to hire more people and get the necessary infrastructure, whereas PEOs already have the manpower and resources needed to get the work done efficiently.
Finally, working with PEOs may also reduce potential risks and liabilities. Filing for taxes and benefits can be tricky for most small businesses, making them prone to penalties from the IRS. PEOs are updated with all the current laws, so finding a reliable partner helps you avoid legal and financial liability and stay compliant with regulations.
Work with Vested HR for PEO Services, Including Payroll and HR Tasks
Our team of payroll experts will take time to evaluate your current payroll and tax planning processes, identify immediate needs, and develop a plan of action to address your unique challenges. Each pay period, you’ll receive processed payroll checks, reports, and other items to keep your business operations running smoothly.
Contact us today to learn how we can strategically meet your payroll and tax planning needs.