ASA Central Network

communities_1.jpg
  • 1.  Payroll vs Outsourcing Payroll

    Posted 05-31-2022 13:49
    Afternoon!

    I was hoping I could get an idea of how many companies are outside of a PEO.  We are currently utilizing a PEO but are looking to change that.  What are some of the pitfalls you have encountered either leaving a PEO or not utilizing a PEO?

    Thanks so much,
    Stacey

    ------------------------------
    Stacey Haley
    CFO
    4 Corner Resources
    Orlando FL
    (407) 872-1521
    ------------------------------
    Avionte post ad


  • 2.  RE: Payroll vs Outsourcing Payroll

    2020 Staffing World Attendee
    Posted 06-01-2022 09:24
    Hello Stacey,
    We have used a PEO and owned a PEO.
    Pitfalls for leaving or not utilizing a PEO:
    1. Having to set up all your own accounts (work comp, SUTA, etc).  If you are in one state it's much easier, if you are in many states, it's cumbersome.
    2. Having to set up all your own processes for the above.  If you do not have someone overseeing work comp or unemployment claims that mismanagement will cost you for years.
    3. Taking on the risk of errors and mismanagement.  This industry is littered with owners that got into serious trouble because they didn't pay their employment taxes on time (or at all) and/or didn't classify their work comp codes correctly (or didn't pay at all).  These penalties can be substantial.
    4. Division of focus.  You will now have to be the one responsible for tax filings, work comp renewals, GL/EPLI/E&O renewals and coverage, software (depending on the PEO).  The list goes on and on.  

    Hope that helps.

    ------------------------------
    Cary Daniel
    Co-Founder & CEO
    Nextaff - Corporate
    Overland Park KS
    (913) 562-5614
    ------------------------------

    Avionte post ad


  • 3.  RE: Payroll vs Outsourcing Payroll

    Posted 06-01-2022 10:25
    This is a really good overview. I think it speaks to an important point, which is making the switch is never easy, but is particularly challenging after you've scaled into the PEO relationship. It's a lot easier to make the transition with one or two states to handle for SUTA/WC etc, but another story entirely if you are operating in multiple states.

    A good broker with referrals to some outsourced management can handle a lot of the rigor that comes with having the right coverages, software, and processes.

    Largely it's just an economic decision based on the PEO fees. If you can save substantial money operating outside of the PEO, it's worth it to make the switch. From an M&A perspective, being outside of a PEO relationship is also helpful because it substantially de-complicates the sale process. But if you aren't committed to doing the things the PEO is doing for you correctly, it's not worth the switch.

    ------------------------------
    Sean Barber
    CEO
    Pluto Healthcare
    Columbus OH
    (513) 600-7331
    ------------------------------

    Avionte post ad


  • 4.  RE: Payroll vs Outsourcing Payroll

    Posted 06-01-2022 18:37
    Appreciate the information Sean.  I did not even think about the M&A perspective.  We would plan on adding a head count and still have savings, but this becomes a very important hire.  

    Thank you,
    Stacey

    ------------------------------
    Stacey Haley
    CFO
    4 Corner Resources
    Orlando FL
    (407) 872-1521
    ------------------------------

    Avionte post ad


  • 5.  RE: Payroll vs Outsourcing Payroll

    Posted 06-01-2022 18:35
    Thanks Cary!  I had not thought about processing the unemployment claims which can obviously be time consuming!

    ------------------------------
    Stacey Haley
    CFO
    4 Corner Resources
    Orlando FL
    (407) 872-1521
    ------------------------------

    Avionte post ad


  • 6.  RE: Payroll vs Outsourcing Payroll

    2020 Staffing World Attendee
    Posted 06-01-2022 18:51
    Of course, you can always outsource that and/or your payroll tax processing, but now you're managing 2 vendor/partners vs one and probably not saving a ton of money...

    ------------------------------
    Cary Daniel
    Co-Founder & CEO
    Nextaff - Corporate
    Overland Park KS
    (913) 562-5614
    ------------------------------

    Avionte post ad


  • 7.  RE: Payroll vs Outsourcing Payroll

    Posted 06-01-2022 10:54
    Hi Stacey,
    GREAT QUESTION!  It's also important to find out how the PEO handles the following items as they can impact your business:
    1) what company's name will go on the payroll checks (if you are staffing it can be confusing to have another company's name on the payroll checks
    2) are they able to payroll 1099'd staff?
    3) if you drop temps in a state do you have to re-apply for work comp in that state? We've had some clients that would add and drop temps in a state and the PEO paperwork re: workers comp was difficult and slow
    4) Will your work comp claims be tracked and reported for YOUR company so that you will maintain an Experience Mod in case you ever want to leave the PEO 
    5) Will you need to re-enroll all of your employees and temps into the new program meaning all new HR paperwork, i9s, eVerify etc?

    Just some things to check out to ensure you're comfortable with the process and how things will work going forward.
    Respectfully,
    Shannon Tornoe
    Coast to Coast Insurance Brokers
    484.680.6377
    stornoe@ccibinsurance.com

    ------------------------------
    Shannon Tornoe
    President
    Coast to Coast Insurance Brokers
    Wayne PA
    (610) 225-0553 x101
    ------------------------------

    Avionte post ad


  • 8.  RE: Payroll vs Outsourcing Payroll

    Posted 06-01-2022 11:58
    Hi Stacey,

    Usually companies move on from a PEO relationship (to a private carrier) because they want to bring payroll in house and/ or shop rates.  

    Of our 225 staffing comp clients about 50 use PEOs, 75 use EORs,  and the rest use private carrier programs  that specialize in staffing. In fact one PEO program does allow the staffing client to do payroll in house on a "pay as you go" basis. 

    Our team of staffing insurance Agents, have dozens of staffing clients  that use private carriers. It really depends on your codes, loss history, and cash flow considerations since usually with a private carrier you are committed an annual premium amount -- at least until your audit.

    Glad to discuss in more detail if you like.

    Stay safe,

    David 


    .
      
      
    David Schek
    President
    Staffing Comp Solutions
    American Staffing Association Member since 2005
    ASA  Central 2019-2021 Most Valuable Contributor
    ASA PAC Contributor
    ASA Safety Committee Member

    America's Leading Staffing Workers  Compensation Broker With 50 Years Experience. 
                            ------------------------------            

    How To Choose the Best Staffing Work Comp Broker:
     
    Work Comp Staffing Solutions Options:

      
      Contact Information:
      Ofc.-          202-302-1212

                                           

           This electronic mail message and all attachments may contain confidential information belonging to the sender or the intended recipient. This information is intended ONLY for the use of the individual or entity named above. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution (electronic or otherwise), forwarding or taking any action in reliance on the contents of this information is strictly prohibited. If you have received this electronic transmission in error, please notify the sender by telephone, facsimile, or email to arrange for the return of the electronic mail, attachments, or documents.

     




     






    Avionte post ad