Outsource to a PEO and Focus on Growing Your Business
As a business owner, or human resources manager, you may not have all the time it takes to focus on the details of payroll processing. After all, you probably didn’t go into business to manage payroll and human resources.
Many employers choose to outsource payroll because they’re not experts on calculating overtime, paying employees who work across multiple states, or checking to make sure payroll taxes are paid and reported on time.
When you outsource payroll to a payroll company or PEO, it frees up your time to focus on the other responsibilities that come with running a business. Here are four ways a payroll company or PEO can save you time and money.
#1 Accurate Payroll Processing
Payroll mistakes are some of the most common errors employers make. For example, classifying employees incorrectly, as exempt or non-exempt, creates an opportunity for further inaccuracies. Here are some examples of the mistakes that go along with the misclassification of an employee:
- You have not paid an “employee” correctly and may have missed overtime wages.
- You have not recorded work time correctly.
- You have not filed the appropriate federal and state tax forms.
- You may not have made appropriate contributions to retirement plans.
- You may not have given employees the appropriate benefits notices and statements.
- You may not have been paying appropriate workers’ comp premiums.
Other payroll examples where frequent errors occur include calculating overtime, holiday pay regulations, job costing, certified payrolls and handling payrolls with employees in multiple states. In just the months of May and June of this year, four Department of Labor investigations resulted in the following:
- Ecos Homecare Inc., was ordered to pay $213,461 for overtime and recordkeeping violations.
- American Classic Construction Inc. was ordered to pay $310,000 for overtime and recordkeeping violations.
- Meers Store & Restaurant Inc. was ordered to pay $335,687 for willful violations of minimum wage and overtime provisions.
- Synergy Commercial Service LLC was ordered to pay $351,869 for minimum wage and overtime violations.
Partnering with a payroll company or PEO, can help eliminate the need for your staff to learn pay laws for various states which saves you time. You also gain payroll expertise which can help keep you in compliance with wage and hour laws.
#2 Tax Code Compliance
Business owners may not be aware of tax codes, especially if they operate in more than one state. Payroll experts remain up-to-date on tax code changes and can easily correct errors. With a typical stand-alone payroll company, there may be software to help you create your tax reports, but you’re still responsible for filing those reports and paying your taxes. However, a PEO handles tax reporting and filing on your behalf and even assumes the responsibility for accuracy.
Tax Management Services with a PEO typically include:
- W-2 processing
- 940 and 941 filings including federal withholding
- W-3 processing
- State withholding
- State unemployment
- Local taxes
- Unemployment claims handling
- Tax credit reports available
As you see in the examples above, the penalties associated with wage and hour or tax violations add up quickly and put your business at risk for legal action. When your company works with a payroll company or PEO, these risks are reduced, allowing you and your staff to focus on other issues.
#3 Long-Term Savings
Over time, outsourcing payroll could be more affordable than doing things yourself with a payroll software or hiring someone to coordinate payroll in-house, especially if other services are bundled with it. When it comes to choosing between a payroll company and PEO, make sure you inquire about any added services fees up front so you can compare apples to apples. In addition to integrated payroll services, PEOs:
- Cover your employees with workers’ compensation insurance
- Provide guidance on HR best practices
- Help make sure your business remains in compliance with employment laws
- Offer your employees a flexible benefits package including health coverage and 401(k)
- Administer benefits
#4 More Time for What Matters
PEOs like FrankCrum handle other payroll-associated tasks as well, like wage garnishments, which saves you time and eliminates some potentially awkward moments with your employees.
Our payroll experts help facilitate the processing of payrolls with all levels of complexity, which include:
- Multi-state payrolls
- Certified payrolls
- Job costing
- Multiple pay rates
- Permissible Deductions
- Per diems and non-taxable reimbursements
When you’re not up to your elbows in payroll, benefits or other HR administration, you’ll have more time to focus on what matters, business performance and growth. You’ll also save money because your employees will be paid accurately and on time.
For more information on FrankCrum’s payroll services, call 1-800-277-1620 ext. 4.