So I’m at the golf course trying to hit a lob shot over a sand trap, land it on a downslope and have the ball stop immediately next to the hole. I can’t do it. I try over and over again but I just can’t do it. It is really frustrating.
Out of the corner of my eye I see Steve Haskins nearby. He is a former professional golfer who made a lot of money on tour. I ask him to show me how to make this shot. He comes over and does it four times in a row. That’s right, four times in a row. Each time the ball checks and ends up right next to the pin. And he does it with one hand!
Later on we have a soda and he tries to console my bruised ego. The conversation turns to taxes, and then to employee leasing companies (called PEO) and how they work for tax purposes. Under the right circumstances they can really help some businesses.
So today we’re going to talk about these organizations and how they may benefit some businesses :
Things have become really complex today. Small businesses often struggle to meet all of the federal and state government requirements for workers and employees. Many businesses just can’t do it and may be at great financial risk. For example, few of us stay on top of retirement plan requirements, human resource requirements, payroll tax computation and deposit and filing requirements, etc. Even worse are the costs and filing requirements for Worker’s Compensation laws. These risks are not just to the business alone but also to the shareholders and officers who can become personally liable.
So along comes PEO – professional employer organization. These are corporations that can handle some or even all of the above for us. For example, they can do all of the payroll tax accounting, including paying the employees, depositing the right amounts timely with the Internal Revenue Service, and even preparing and filing the proper payroll tax forms and year end W-2s. Some of them can even arrange payroll financing. They often have staff resources to handle retirement plans and employee liability for hiring – firing – etc.
In the eyes of the IRS, a PEO can become certified and treated as the co-employer of those employees. This is a big deal as it may allow you to offload many responsibilities and more importantly, liabilities to the PEO. Since the PEO becomes the “employer” for tax purposes, the business owners may be relieved of personal liability for certain unpaid payroll taxes, including penalties. Also, as employer we may benefit from their lower worker’s compensation rates which can be very much lower and generate a cash savings to our business. PEOs are highly regulated by state regulatory agencies and the IRS itself.
If you are a small to midsize business fed up with government rules and regulations, and if you are paying way too much in Worker’s Compensation fees, or perhaps you need help with retirement plans or human resource risks, you might look at a PEO for help. Under the right circumstances they may be a real benefit and also provide possible cash savings and risk reduction.
Anyway, I’m off to the golf course trying to practice a lob shot that I’ll never get but which my fragile male ego won’t let go of.