Learn More About Working With A PEO And The Value It Provides Businesses Of All Kinds
A professional employer organization, commonly known as a PEO, operates under a distinct business model. So, what is a PEO, exactly? Typically licensed at the state level, a PEO provides a contractually based service where a company transfers some responsibilities to a professional employer for the employees currently working for the client company. These responsibilities almost always involve the PEO assuming the responsibility for timely remittance of payroll taxes to the federal government for social security, Medicare, and federal income tax withholding. They also include the employer portion of social security and Medicare, as well as federal unemployment taxes paid by the employer. In some states, the employer transfers all responsibility of state unemployment, state income, and other employment related taxes to the PEO. This is a significantly more robust role than the payroll service model. When working with a PEO, the PEO is the co-employer.
A Professional Employer Organization Helps Take The Burden Out Of Human Resources
The payment and calculation of these taxes are paid directly by the PEO using its own Federal Identification Number, or FEIN, and established bank accounts. In order to facilitate the processing of payroll for thousands, tens of thousands, and in some cases, hundreds of thousands of employees in a professional employer organization, a sophisticated human resources information system (HRIS) is typically utilized so that information can be shared in a protected environment. The PEO uses large scale buying power to select, purchase and support the latest technology to serve various users in the co-employment relationship. Clients and their employees benefit from real time information on timekeeping, payroll and benefits.
Save Time And Money On Compliance Issues And Workers’ Compensation When Working With A PEO
The establishment of a co-employer relationship via the contract between the PEO and business owner creates a shared, or insurable interest between the PEO and all the employees. The professional employer organization can cover the employees in a single insurance policy for workers’ compensation, attracting more carrier competition among highly rated insurance companies. This saves the employer money in volume discount sharing; protects from liability; and, adds value with real time premium calculation frequently resulting in no required audit. Additionally, the PEO is incentivized to help keep the employees safe, the employer in compliance with OSHA; and, protects against claims abuse. Many PEOs make available workers’ compensation in all 50 states, further avoiding hassles of hiring remote workers.
A Professional Employer Organization Helps Provide Valuable Benefits To Employees
Employee benefits available through a PEO relationship can add significant value. Benefits like health, life, dental, and vision insurance are easy for the employer to offer. The rates are very often lower to the larger group, the choices greater, and administration easier with enrollment and termination handled seamlessly as a function of payroll start and stops. Attraction and retention of quality employees is further enhanced with 401(k) retirement plans with lower costs to the client employer and employee participant.
Professional Employer Organizations Can Help Provide Liability Protection
Protection against employment liability claims is frequently provided with best management practices advice. When needed, Employer Practices Liability Insurance is available and protects when an employee sues for wrongful termination, discrimination and other employer exposures.
Want To Know More About Working With A PEO?
Call Sam Bond Benefit Group Today
The facts are small employers grow faster when they focus. Employers offering employee benefits have an advantage hiring and retaining quality employees to their teams. Transferring risk and liability gives peace of mind to stakeholders in the business.
Understanding the relationship between the PEO, the employer and the employee is crucial in evaluating the cost to benefit ratio under such an arrangement. All PEO companies are not alike and understanding the measurable differences is an important step for a firm considering the concept. Learn more about the PEO concept and how a professional employer organization can help save time and add value. Call PEO specialist, Sam Bond Benefit Group today at (727) 823-2663 or contact us on our website here.