Highlights
- For small and mid-sized businesses, payroll can be a complex, time-consuming, and error-prone process.
- By partnering with a PEO, companies can leave payroll in the hands of experts, increasing efficiency and ensuring they are always in compliance with tax regulations.
- At Employers Resource, we provide comprehensive PEO services to support businesses’ payroll and taxes, compliance, benefits, and more. Contact us to get started!
Payroll processing is a core business function — and you need to get it right. However, it involves complex calculations and can be prone to error, exposing companies to unexpected penalties. With PEO payroll services, small and mid-sized businesses can delegate this responsibility to a strategic partner and benefit from streamlined processes, compliance expertise, and cost savings.
But what is, exactly, a PEO, and how can it support your business payroll? Read on to find out how PEOs can simplify your business’s daily processes (including payroll) and make them more accurate and efficient.
Let’s get started!
What Are PEO Payroll Services?
Let’s start from the ground up: PEO stands for Professional Employer Organization and refers to a firm that provides outsourced HR solutions for companies. In essence, a PEO becomes a co-employer with its client company, handling certain HR-related responsibilities on its behalf.
PEO services typically include payroll processing, employee benefits administration, HR compliance, and risk management, among other HR tasks.
So, what are PEO payroll services? When we talk about PEO payroll services, we specifically refer to the payroll-related tasks offered by a PEO. PEOs can handle several aspects of the payroll process for a company, including:
- Payroll processing. Calculating employee wages, salaries, bonuses, and other compensation, including overtime and commissions.
- Tax withholding and reporting. Deducting federal, state, and local taxes from employee paychecks, taking care of payroll tax reporting and sending payments to tax authorities.
- Benefits deductions. Managing deductions for employee benefits such as health insurance premiums, retirement contributions, and other voluntary deductions.
- Direct deposit or paper check distribution. Facilitating the distribution of employee pay through direct deposit into bank accounts or issuing paper checks.
- Payroll compliance. Ensuring compliance with labor laws and regulations related to payroll, including minimum wage requirements, overtime rules, and payroll tax regulations.
Should a Small Business Outsource Payroll?
Having an effective payroll system in place has a direct impact on your business, from managing cash flow to keeping employees happy and ensuring tax compliance.
Sometimes, small business owners do payroll themselves or have a family member, friend, or employee do it for them. But unfortunately, payroll is one area where bookkeeping classes probably aren’t enough… it’s easy to get into hot water if you don’t meet compliance requirements, getting into costly tax penalties.
The most common payroll issues range from not deducting the right amount from employees’ checks to cover taxes, to completing employee forms incorrectly, to processing state tax inaccurately. Other times, employers simply realize the process takes so much of their time each payroll cycle that they barely have time to run their business!
The top challenges employers face when running payroll by themselves are:
- Consistent and accurate deductions and withholdings
- Getting payroll processed and out on time
- Compliance with state employment compensation and tax laws
- Timeliness of tax deposits
If you are struggling with these challenges, seeking expert payroll assistance could be the game-changer your business needs to thrive.
What Are the Benefits of PEO Payroll Services?
Here’s how PEO Payroll Solutions can help your small or mid-sized business:
PEO Payroll Services Simplify a Complicated Process
Each payroll cycle is unique. Things like differing pay rates, commissions, payroll taxes, and varying annual state withholding amounts often make the process too complex. Regulations are constantly evolving and there are many variables you must consider, such as:
- Keeping up with multi-state compliance. Employment laws regarding basic things like how a workday or period is defined, along with overtime, comp time, and final payment deadlines, can vary by state…and even by county!
- Following employee classification rules. Accurately defining whether employees are part-time, full-time, temporary, or sub-contractors.
- Accurately filling in payroll forms. There’s a protocol that conforms to regulatory laws for storing and keeping those documents.
- Keeping track of state and federal deductions.
All this creates a lot of paperwork and requires time and focus for employers trying to handle it in-house.
By outsourcing payroll, you can streamline the payroll process and make sure your business stays compliant with state and federal payroll and tax requirements. It’s also a huge advantage for cash flow management, as your deductions will be more consistent throughout the entire year.
Ensure that Employees Get Paid Accurately and On Time
When you hire a PEO to handle your payroll, you just have to make one simple payment per payroll cycle. The PEO is in charge of making sure that payments are accurate, on time, and cover all your liabilities.
As an employer, you need to provide a list of their employees, how many hours they worked, and their pay rates…and let the PEO handle the rest!
Save Time Spent on Manual Calculations
For business owners, time is the most valuable resource. Payroll can be extremely time-consuming and complex. For example, in a state like California, crunching numbers for overtime can take hours of work each payroll cycle. Why not invest that time into growing your business instead?
Outsourcing your business’s payroll function reduces paperwork and admin work, giving your internal team more time to concentrate on higher-impact activities.
Reduce Liability Costs
Stop stressing over deductions and withholdings! With a PEO by your side, you’ll have a dedicated team of experts looking out for you. Enjoy peace of mind knowing you’re well-prepared for tax season.
Payroll mistakes can clean out your bank account, cause missed paychecks, or even bankrupt you. One small oversight related to a withholding that is not properly handled for a year can end up causing a huge surprise. But with PEO payroll services, you’re protected from tax liabilities.
At Employers Resource we are constantly tracking, advising, and collecting the amounts that you as an employer should be paying for things like benefits, Workers’ Comp, and other withholdings. Rest assured, we protect you from those year-end surprises!
Retain Employees and Improve Work Quality
It’s no surprise that late paychecks have a profound impact on employee morale. When payments are lost, inaccurate, or delayed, it not only causes work absences but also hinders productivity.
Employees expect to get paid accurately and on time. At the same time, happy employees tend to deliver higher quality work for your company and stay with your company for the long run. As an employer, making sure that payments are delivered consistently and without errors is vital — and that’s something you can easily achieve with the help of a PEO.
Get Support and Guidance
While there are many alternatives to PEO payroll services, there’s one critical piece that you can’t overlook: constant advisory.
Partnering with a PEO provides access to specialists with extensive knowledge of payroll and tax compliance that you simply can’t find in your average bookkeepers or accountants. With a team of experts by your side, you can get the guidance to comply with the many variables of employment regulations, while keeping an eye on the big picture.
Take the Stress Out of Payroll
At the end of the day, these are the things that matter: Are your employees getting paid accurately and on time? Are you spending your time on the things that make your business grow? Can you sleep well at night knowing that you’re in compliance with all the payroll and tax laws and that you’ve made all the correct withholdings for your business?
With PEO payroll services you can have peace of mind that all payroll-related tasks are running smoothly and go back to focusing on core business tasks. Need help with payroll? Let Employers Resource be your strategic HR outsourcing partner. Get a quote from us today!
