PEO’s or Professional Employers Organizations, have been around for the better part of 20 years, yet remain a mystery to most business owners. When employers hear the phrase, PEO, or Staff Leasing Companies, the most common response is, “no, we prefer to have our own employees”, or, “we don’t use “temporary staffing”, or “we’re happy with the staff we have”.
In reality, a PEO takes your existing employee pool, and becomes a co-employer with your company. It does not provide temporary staffing, it does not manage or supervise your employees, nor tell them how to do their job. And, it certainly does not re-assign employees from one company to another. There is virtually no change in the day to day operations of the company. The only main difference is by virtue of membership in the PEO Staffing Company, the employees enjoy significant benefits at virtually no additional cost to the employer.
The PEO Company becomes the co-employer, and in doing so, assumes employer related liability and accountability for all the employees. It assumes responsibility for the Affordable Care Act, including reporting and compliance, FLSA Compliance, Human Resources, Payroll Processing & Reporting, Group Health & Life Insurance, Workers Compensation and Unemployment Benefits.
The PEO assumes full accountability for IRS payroll tax liabilities and audits. What does this mean? It means that the IRS will not audit you or send you notices for Payroll Tax audits since you are not the employer on record.
In a nutshell, a PEO is a a one-stop service partner that enables business owners to focus on running their business instead of managing administrative and compliances issues. A PEO offers your employees benefits that would normally only be available at much larger companies.