Payroll is an essential part of your business that you must complete correctly and handle payroll taxes on time every month. Any errors can open you to compliance fines, employee lawsuits, and decreased morale. You may have to compensate employees by paying overdraft or late fees if payroll is late. Companies commonly outsource payroll because it is essential, tedious, and requires accuracy.
Doing payroll also takes hours of the time your employees could spend on more useful and interesting work.
How PEOs Save Time With Payroll Taxes
Outsourcing payroll is common, but there is a way to go further by partnering with a professional employer organization (PEO).
Not only will a PEO calculate all of your taxes for you, but through the mechanism of co-employment, they are the only outsourcing partner that files payroll taxes for you and takes on the liability if they are incorrect. They are both less likely to make an error because they are experienced specialists and will take responsibility in the tiny event they do, fixing the problem for you. You won't have to think about your payroll, but you can rely on the PEO to handle it, answer any employee questions, and deal with issues as they come up. You only have to worry about telling them when to distribute extras, such as performance or holiday bonuses.
Payroll processors have a lower ROI because their scope is much narrower. They can only send you a notification about how much you owe. You still have to file and pay the taxes, and errors can happen in the transition area where you take their data and send it to the government. You are also liable if they make a mistake. While it is rare for a competent payroll processor to make errors, errors do happen, and you will be left holding the bill as if you had done the entire process in-house. All they save you is time, which, while valuable, more efficient options to outsource payroll are available.
Gain Access to Automated Tax Filing
PEOs can handle payroll better by using specialized software that eliminates manual entry, saving time and reducing the chance of an error substantially. This software is typically beyond the reach of small companies. It integrates with other HR software to streamline onboarding and other aspects of employee management.
When you onboard an employee, their salary or hourly rate is entered into the system and stored so it is always accurate. Hourly employees can then enter their time directly into the system, meaning that errors in hours worked are less likely to happen, and when they do, you can often demonstrate that the employee is the one who made a mistake. Overtime will be calculated automatically based on the rules for the employee's location, which is handy for companies with remote workers or job sites in multiple states.
Additionally, PEOs have access to government resources that allow them to file taxes quickly and efficiently. Because it takes them so much less time, they can keep their rates affordable. Alongside the more comprehensive nature, PEOs give you the best ROI of any HR outsourcing solution.
Gain Access to Comprehensive Outsourcing
PEOs are a comprehensive outsourcing solution and don't just speed up your payroll tax filing. That frees your internal HR people to handle more complicated duties that require their knowledge of your company.
They can handle the nitty gritty parts of onboarding, such as checking immigration status and processing tax forms. They can also handle benefits administration, so you do not have to deal with routine questions from employees about their benefits. PEOs typically have a compliance team to help you with all HR regulations across multiple jurisdictions.
PEOs can also provide you with benefits you can get no other way. It's easy enough to outsource most of the payroll, benefits administration, and most tedious parts of onboarding. However, through co-employment, a PEO can allow you to offer much better benefits to your employees. They can add your employees to their healthcare plan, giving you the benefits of economies of scale and helping you provide better benefits, including dental and vision. They can also add them to retirement plans, which many small companies cannot offer.
Finally, you can benefit from their experience and knowledge.
Let a PEO Handle Your Payroll Needs
Payroll is vitally important to all companies—but worrying about payroll compliance can waste a lot of time. By outsourcing to a PEO, you can essentially forget routine payroll processing even exists and no longer worry about payroll tax compliance making a mistake.