As a small business owner, do I really need a PEO?

This is a great question.  but first we need to answer the question that some of you are asking, like, what is a PEO?
What is a PEO?

• A professional employer organization (PEO) is a company that contractually assumes and manages critical human resource and personnel responsibilities and employer risks for its small to mid-sized businesses by establishing and maintaining an employer relationship with the employees.
• Are PEOs recognized as employers?
  PEOs operate in all fifty of the United States. Twenty-three states provide some form of specific licensing, registration, or regulation for PEOs. Many states statutorily recognize PEOs as the employer or co-employer of work site employees for purposes of workers’ compensation and state unemployment insurance taxes. The IRS has long accepted the right of a PEO to withhold and remit federal income and unemployment taxes for the employees. The IRS has promulgated specific guidance confirming the authority of PEOs to provide retirement benefits to workers.
• What is the difference between employee leasing and a PEO arrangement?
  The major distinction is that a leasing or staffing service supplies new workers on a temporary or project specific basis. These leased employees return to the staffing service for reassignment after completion of their work at the client. Some would define employee leasing as a supplemental, temporary employment arrangement where one or more workers are assigned to a customer for a fixed period of time, often for a specific project. This concept creates little long-term equity or investment between the worker and customer (much like leasing a car for two years and knowing that you are using it for a specific need but not building any long-term equity).A PEO arrangement, however, involves all or a significant number of the employees in a long-term, non-project related, employment relationship. The PEO assumes employer responsibility for employment tax, health and retirement benefit plans, and other human resource purposes. Through the use of a PEO relationship, client companies make a long-term investment in the employees, because in most cases, the PEO provides access to health benefits and/or insurance, retirement savings plans, and other critical employee benefits for their employees. In the event a PEO relationship is terminated, the employees will cease to work for the PEO, thus becoming employees of the client.

Next week we will answer the question about what is the difference between employee leasing ans a PEO arrangement.

If you have questions, please feel free to call Payroll Solutions at 702.256.3748.  Be sure and ask for me, Eli Alper.  In the mean time, check out the video below.

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