PEO Payroll

How Does Payroll Work In A PEO?

Payroll can be challenging, so we’re here to help. At HCC, we’re your HR partner helping to reduce the challenges of managing your workforce so you can stay focused on leading and growing your organization. Leave the processes, paperwork, and potential problems of being an employer to us so you focus on growing your business.

Find out more about PEO Payroll solutions work for your business.

In today’s business world, it is more important than ever to find ways to save money and operate more efficiently. One way to do this is by using a PEO, or Professional Employer Organization, to provide outsourced HR services to small businesses. This usually includes payroll processing, benefits procurement and administration,  workers’ compensation coverage, along with risk and compliance, and even an employee self-service technology platform. By using a PEO, small businesses can save time and money on these essential services as an integrated part of more comprehensive human resources services.

HCC’s PEO payroll services are designed to help your organization reduce payroll costs and comply with federal, state, and local payroll regulations. By providing comprehensive, integrated administrative services and customized reporting solutions, HCC’s PEO program helps employers ensure payroll is accurate and hassle-free while reducing tax and legal liabilities. Partnering with a CPEO certified by the IRS will relieve your business of these tasks while also providing additional advantages a payroll service provider can not.

What Are PEO Payroll Services?

Payroll is an essential yet time-consuming process for most companies. At HCC, we provide employee payroll services as an integrated part of our PEO solution. This service delivers quick and easy access to detailed payroll information, payroll processing, tax deductions and tax filings, garnishments, tracking hours, time and attendance, PTO, benefit contributions, and deductions. With HCC’s payroll services, we provide you with an intuitive payroll platform that allows your employees to truly have self-service access by viewing pay stubs, W-2s, benefit selections, time-off requests and reports, direct deposit, and secure electronic payroll processing. Employees can also manage their accounts online and receive email notifications when there are changes to their account information.

The tasks surrounding payroll can be so challenging it’s no wonder business owners see payroll processing as a prime activity for outsourcing. From the moment the first newly hired employee clocks in, business owners must consider issues such as payroll calculations, employee tax payments, and overtime pay. Throw in garnishments, shift differentials,  FLSA regulations and a catalog of tax compliance rules and it is no wonder business owners feel overwhelmed. And unlike many other employee-related issues, payroll is a continual activity to make sure your team receives their paychecks on time. 

With payroll processing, an employer calculates and pays employee wages, taxes, and other deductions. In order to calculate employee wages, an employer must take into account an employee’s gross pay, deductions, and taxes. The process begins with recording the hours worked by each employee during a given pay period. Using this information, the employer then calculates each worker’s gross pay for the period. Finally, net pay is calculated and payments are issued to employees. Payroll processing is often complicated by deductions and additions to income, such as taxes and benefits.

Here are a few of the reasons why outsourcing your payroll services to a PEO is a smart idea for small and mid-sized businesses. 

  • It can be time-consuming and complex to manage payroll in-house.
  • Outsourcing can save businesses money by reducing their administrative costs.
  • By outsourcing, businesses can access specialized expertise and support that they may not have in-house.
  • Outsourcing can help businesses stay compliant with government regulations related to payroll and taxation.
  • By outsourcing, businesses can focus on their core competencies and leave the payroll process to the experts.

Why Use A PEO vs. A Payroll Service Provider?

For smaller businesses, payroll processing manually can be time-consuming and costly. When it comes to payroll, businesses have a few options. They can process the payroll in-house, use a software provider, use a third-party payroll service provider, or use a PEO

While each of these options has its own set of pros and cons, using an outsourced payroll service provider or a PEO has become a popular option for small and mid-sized businesses because it’s an affordable use of resources that allows a business to focus on core operations. A payroll service provider can be cheaper and easier to use, but it doesn’t offer the same level of protection and comprehensive services as a PEO. PEOs offer a variety of services, including payroll processing, employee benefits administration, and workers’ compensation insurance. Using a PEO certified by the Internal Revenue Service (CPEO) can reduce financial liability for taxes. A PEO can help you avoid costly mistakes and lawsuits, as well as provide a more holistic view of the human resources issues and challenges you face in running your business.

Businesses can outsource the risk associated with processing payroll to avoid the obvious risk of not accurately calculating and paying employees’ wages on time. A payroll processing error can result in significant penalties from the government and employee lawsuits.

A payroll service provider only offers solutions related directly to processing payroll while a PEO can offer a comprehensive HR solution that includes HR administration, benefits, risk management, compliance, and employee support, on top of payroll services. The impact is that decisions companies make in the payroll area might affect other areas like complaince or benefits. The integration offerring of the PEO will catch these issues before they become problems.

Correctly classifying employees is another payroll issue outside the purview of a payroll service provider. Your employees’ pay and withholdings will be determined by whether they are exempt, non-exempt, or, as in the case of a contractor/freelancer, not an employee at all. Your management and HR team will decide an employee’s status, they must do so within the strict definitions set forth by federal and state governments. These regulations are complicated and constantly changing. A PEO will help you evaluate the situation and come to the correct decision. 

When it comes to running a business, payroll is one of the most important aspects. It can be time-consuming and complex to manage payroll on your own. Many businesses choose to outsource payroll as part of a comprehensive PEO suite of human resources services. PEOs are experts in payroll services and support, including processing paychecks, tracking vacation days, time and attendance, managing benefits, and supporting other HR administrative functions. It’s crucial to your business to keep your employees paid on time and in compliance with all applicable laws. This is why so many small and mid-sized businesses are partnering with a PEO.

What Are The Benefits Of Using PEO Payroll Services?

When a business decides to outsource payroll functions to a PEO they can free up time and manpower that would have been used to complete these administrative tasks and instead focus on more important strategic initiatives. By reducing processing time, and gaining access to specialized software and services, businesses can gain efficiencies while saving money by shifting the need for dedicated in-house payroll staff.

Using a PEO to provide payroll can be a more cost-effective and comprehensive solution. 

  • PEOs have expertise to ensure payroll processing is accurate and efficient. 
  • PEOs can provide employees with access to affordable health insurance and other benefits. 
  • A PEO can help businesses avoid compliance headaches related to employment law. 

More generally, a PEO provides integrated expertise for both tasks and guidance across all areas of HR services and support for a business owner. 

While payroll demands time and resources, it’s compliance issues that carry the greatest HR-related risks to your business. As a business owner, you face serious penalties if you aren’t keeping accurate records or protecting your employees’ information. Noncompliance fines can be substantial for employment tax penalties, depending on the type of infraction, the size of the business, how much is owed and whether payment was late or never received. Fees will also increase the longer that payments are past due. That’s not including attorney fees or time lost dealing with these issues.

Payroll service provider responsibilities don’t necessarily help you stay up to date on these and other regulation changes unrelated to payroll. Small businesses spend about $12,000 a year in their efforts to understand and comply with complex regulations. A PEO will help you navigate the reams of federal laws governing your relationship with your employees. You’ll be confident that you’re following the law while also freeing resources to focus on core activities related to business development.

However, it is important to do your research before selecting a provider as not all companies offer the same level of quality and service. Ask for references from other businesses that have used the provider’s services and read online reviews to get an idea of what others have experienced. Also, find a PEO that is certified by the Internal Revenue Service (CPEO).

Using a Certified PEO (CPEO) is a very good way to guarantee the integrity and reliability of your payroll because a PEO certified by the Internal Revenue Service (IRS) is required to file all payroll tax returns, as well as provide a substantial business tax return with the majority of payroll taxes deducted. The IRS requires a PEO to have certain minimum standards and procedures in place before it can be certified by the IRS.

How Does Payroll Work Within a PEO?

Businesses of all sizes can benefit from payroll services provided by a PEO. PEOs offer a wider range of services, including payroll processing, time tracking, and workers’ compensation coverage. By outsourcing human resources services to a PEO, businesses can save time and money across their HR services. In addition, because a PEO offers an integrated service, changes affecting other areas of the employee life cycle are caught. Wouldn’t it be nice to have one company to call to discuss employee-related matters? 

PEOs have teams of experts in payroll processing, along with other key HR functional areas. They can help businesses save time and money by streamlining the process and ensuring accuracy. In addition, PEOs can help businesses stay in compliance with federal and state regulations governing payroll taxes.

A PEO should provide time tracking as a part of payroll processing to accurately pay employees. Time tracking records the hours worked by employees so businesses can ensure that they are paying their staff for the correct amount of time and any overtime is accurately accounted for. Additionally, time tracking keeps track of employee absences and sick days.

PEOs can help businesses obtain workers’ compensation coverage quickly and easily. They work with a variety of insurance providers and can help businesses find the best rates possible. By becoming a client of a PEO, businesses can enjoy workers’ compensation insurance that is both comprehensive and affordable. In addition to providing this valuable coverage, PEOs can also help businesses manage workers’ compensation claims and keep their employees safe on the job.

PEOs offer other services beyond payroll processing that supports employees and HR management activities that make it easier for businesses to manage their employee benefits. PEOs offer risk management services, like filing a workers’ compensation claim. The PEO will handle the claim and make sure that the business is in compliance with all state laws. This can help business owners avoid costly penalties and lawsuits.

While both a payroll service provider and a PEO can handle payroll functions such as benefits deductions, direct deposits, garnishments, and new-hire reporting there may be some important gaps in the services you receive from a payroll service provider. Iif you count on your payroll service provider to send employee tax withholdings to the IRS, the federal government will hold you liable if your provider fails to make the payments. If you use a CPEO, you won’t need to worry about the IRS knocking on your door. A CPEO is a PEO certified by the IRS. Because it is certified, after you pay the CPEO, the CPEO—not you—will be liable for filing employee tax withholdings properly and on time.

Many businesses find payroll to be a very time-consuming task. There are many aspects of it that need to be handled correctly in order to avoid penalties from the IRS. HCC can take care of all of those details for you, so you can focus on your business. As a certified PEO, we will handle all aspects of payroll, including tax filing and payments to ensure that your payroll processes are efficient and compliant with all applicable laws and regulations while helping you simplify being an employer. Contact us today to learn more about our payroll services.