One of those may be by using an employee leasing companies (called a PEO). Some businesses contract with an PEO to take over payment to their employees. The PEO pays the employees and also pays the payroll taxes and files payroll tax returns. The PEO can also provide employee benefits such as health insurance, retirement plan, etc. Of course the employer still has the right to hire, fire, supervise and otherwise control the leased employees. But the tax duties fall primarily on the PEO. The leasing company may also become liable for the actions of the employees- a key benefit. Since the employees work for the PEO as a coemployer, the PEO may be liable for the payroll taxes. The penalties and interest that can accrue for failure to pay , failure to deposit and failure to file may far outweigh the cost of a PEO and in some cases the PEO rate savings could actually pay for itself.
