Does your company have reasons to fear tax season? Having trouble meeting deadlines to issue those W-2’s and 1099’s? If so, a PEO is the ideal solution. A PEO is a Professional Employer Organization, and assumes responsibility for many of your human resources, payroll, employee benefits, and other employer-related responsibilities. Here is how a PEO can put an end to your tax-season worries once and for all.
Stay on Top of Employee Changes During the Year
A year is a long time in business. Employees come and go, new positions are added, temp agencies are utilized, and contractors come and go. That can add to a lot of confusion when it’s time to issue W-2’s, 1099’s, and pay the payroll taxes. With a PEO company, however, your staff is freed from these worries. The PEO handles your paperwork and keeps track of changes that occur throughout the year, so that everything is in order when it’s time to file and make tax payments. Depending on your business and circumstances, your company may need to file quarterly instead of annually. A PEO can also make this determination and keep you current with your state and federal filings and payments.
Free the Business for Critical Operations
Is your staff up to their necks with daily operations, waiting until the last minute to catch up on tax filings and payments? If so, it’s time to free your employees to do their jobs and allow a PEO to take over tax duties. This means there are fewer errors, because workers aren’t forced to split their time between tasks. The work gets done better and faster, yet the company has no concerns about whether or not the taxes are kept up to date. Studies show that outsourcing non-mission-critical jobs like payroll and human resources is more efficient, inevitably improving the business’ bottom line.
Reduce the Risks of Non-Compliance With Tax Regulations
Non-compliance with state or federal tax laws leads to serious trouble. In addition to fines and penalties, workers can be held personally responsible for errors, omissions, and neglect regarding tax payments. This means that your payroll workers could literally go to jail for getting behind or forgetting tax-related duties. Worse, it is not possible to bankrupt on tax debts. Your company, as well as any employees found at fault, will be held personally and professionally accountable for the debt and any criminal charges related to non-compliance. With a PEO, your employees and your business can relax. Payroll taxes are done for you. There’s no need to worry about items being put off or forgotten when business gets hectic.
Assure the Business Isn’t Illegally Using Payroll Tax Funds for General Purposes
In small- to mid-sized businesses, it is easy to keep a single account or a small group of accounts to work from, paying taxes and other general expenses out of the same accounts. However, it is against federal law to pay general expenses with payroll tax money. This means that if you inadvertently dip into those funds during the year for any reason, you could be held accountable to this law. When you utilize a PEO, this can’t happen. The PEO manages your payroll tax money separately from the ordinary business expenses. This also makes it much easier to see the company’s true financial status aside from tax liabilities, allowing executives to make better decisions about investments, hiring, expansion, etc.
Never Miss Important Changes to Federal or State Tax Laws
Different states have their own laws governing the use and payment of payroll taxes, and with a PEO you won’t have to fret over the differences between Florida law, New Jersey law, Pennsylvania law, etc. It is difficult enough to keep track of changes to regulations within the federal code and the state in which you operate. As the business grows and it is necessary to adhere to laws in multiple states, a PEO can keep you on track even when tax code in a certain state changes.
Take Advantage of Ways to Lower the Tax Burden
Professionals know ways to save on taxes that might not be known among laypersons. For instance, there are ways to establish accounts, move funds, make purchases, etc. that are less costly at tax time than alternate means of doing the same things. A PEO knows how to make the most out of the tax laws to reduce your liability while adhering to the laws. A PEO knows, for example, how to classify an employee versus a contractor. There are no fewer than 20 criteria for determining whether a worker is an employee of the company or an independent contractor. Knowing the difference not only lessens your tax burden, it also keeps you from making classification mistakes that could lead to penalties, fines, or worse.
Stay on Top of Obamacare Regulations
The Affordable Care Act has been one of the most hotly contested employer regulations in recent history. Companies with 50 or more employees are under the federal mandate to provide health insurance coverage for their employees, with stiffer regulations kicking in for businesses with 100 or more employees. However, within these ranges are numerous gray areas — so many, in fact, that some companies are needlessly paying fines rather than attempt to bring the company into compliance.
A PEO can help the business determine what (if any) requirements they are under regarding employee health insurance coverage. The PEO can also help the business budget so that the company can stay within compliance without paying fines and penalties and manage to offer the insurance benefits required. In many cases, this health insurance benefit can mean the difference in recruiting and retaining top employees in an increasingly competitive hiring environment.
Too often, what separates a business that succeeds from a business that fails is its ability to stay on top of tax filings and payments. With a PEO, your company can stay in the group of success stories, not needless failures. SourceOne Partners can help you find a PEO company that is a good fit for your business. Contact us online or call 561-674-0748 for more information today.