Courtney Briggs
Growing your business and your staff might sound like a great sign for your business. But with each new employee comes a multitude of responsibilities that put you and your business at risk. Suddenly you have to learn about and deal with FICA, FUTA, SUTA, Worker’s Compensation, employee handbooks, Fair Labor Standards Act, Equal Employment Opportunity, and employee benefits, just to name a few.
Becoming an expert on taxes and regulations can consume you and tap your creative energy. But failure to comply can jeopardize your business and put you personally at risk. The good news is that outsourcing options can provide instant relief like Orajel on your baby’s sore gums.
Payroll and HR Outsourcing Options
• Payroll Service: Payroll outsourcing has been around for over 50 years and is used by millions of companies in the US. The service typically includes the calculation of taxes, printing of payroll checks, distribution of direct deposit, tax deposits and filings, and the production of W-2s. Unlike most accountants who process payroll, the outsourcing provider typically signs the tax returns and takes responsibility for any penalties and interest if things aren’t handled properly. Cost is approximately $2-5 per check with a minimum of around $25 per processing.
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Administrative Services Outsourcing (ASO): This is a relatively new model offered by many traditional payroll providers. In addition to payroll processing, ASO arrangements typically include full-service Human Resources administration. This can include employee handbooks, job descriptions, guidance with regulations, training, and other employee support. Cost is approximately $20-50 per employee per month.
• Professional Employer Organization (PEO): PEO services began in the 1990s as employee leasing. PEOs typically include all of the services of ASO, plus Workers’ Compensation insurance and employee benefits. A big difference between this model and other outsourcing options is that your employees fall under the PEO’s Federal ID# for tax and legal purposes. Cost varies widely based on your tax and Workers’ Compensation rates compared with those of the PEO. In a few cases a PEO may be able to lower your overall costs. Taking this step has both advantages and disadvantages, so do your homework and weigh the costs and benefits carefully.
Human Resources and tax compliance is growing more complex every year. Failure to comply can be costly, even devastating, to ...
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