What is the difference between a payroll company and a PEO?
As your business grows, it becomes necessary to outsource many administrative tasks, such as payroll. However, finding a company to help can be challenging. Ultimately, you will have to decide between hiring a payroll company or a professional employer organization.
In this article, we’ll go over your options so that you can get a better idea of what will work for your business.
Outsourcing Payroll to a Payroll Company
Outsourcing payroll refers to hiring an outside company to manage payroll. Many payroll companies provide a variety of services, including:
Payroll Tax Services
Time and Attendance Tracking
Reporting and Analytics
Earned Wage Access
When you outsource payroll, you work with a payroll company as a client, retaining all autonomy and control over your employees and HR functions.
Each payroll company will offer varying ranges of services.
Why Do Businesses Outsource to Payroll Companies?
Outsourcing payroll allows business own
ers to focus on other aspects of running their business.
Here are a few ways outsourcing payroll helps make things easier for business owners:
No more compliance headaches or payroll errors
When a business grows, it needs to hire many different kinds of employees, which means keeping up with a lot of rules and regulations. Payroll companies can guarantee accuracy and compliance so business owners don’t have to worry.
Managing payroll is a massive time commitment. Business owners can save hundreds of hours by outsourcing to a payroll company, which means more time to focus on other aspects of running a business.
Help from experts
Payroll companies employ professional payroll and payroll tax experts that can answer questions and help employers gather the data necessary to run successful payrolls and manage taxes.
Reporting and analytics
Outsourcing payroll can also help employers gather essential information in one central location, often offering tools that help analyze the data in order to inform hiring, recruitment, and other business decisions.
Using Professional Employer Organizations
A professional employer organization (PEO) can help smaller and mid-sized businesses focus on growth instead of managing employees. A PEO is responsible for all aspects of payroll processing, including calculating wages, withholding taxes, and remitting payments to the appropriate government agencies.
A PEO offers a range of business services similar to what can be provided by payroll companies, in addition to benefits administration and HR tools. However, these organizations act as a partner with a co-employment
arrangement. As a result, your business operates under the PEO’s FEIN instead of your own.
What are the cons of using a PEO?
Businesses often decide to work with a PEO because they are typically inexpensive and can easily delegate HR and payroll tasks. However, under a PEO, a company loses autonomy because it is operating under the PEO’s FEIN.
Also, if you work with a PEO, it can become difficult to communicate with employees, and you have less control over HR functions. This can lead to poor communication throughout your organization, which contributes to lower employee satisfaction and higher turnover.
Moving Away from a PEO
When a business employs more than 20 to 50 full-time employees, it’s probably time to consider moving on. This is because as a company grows, it becomes more and more essential to manage HR functions internally.
It can be expensive to leave a partnership with a PEO, but Proliant can help by working with financial advisors, brokers, and other partners to untangle PEO services and help you regain autonomy.
Waikiki Payroll Service is a Payroll and HR Company that Will Grow with Your Business
Waikiki Payroll Service is a full-service payroll and HR company with the tools you need to streamline your administrative tasks. Not only do we assume the responsibility for your payroll, but also our solutions can streamline other areas of your business, like Human Resources.
Our worry-free payroll includes the following must-have features:
Verification Testing and Accurate Processing: Accuracy and compliance are ensured through the verification testing feature that identifies inaccuracies before payroll is submitted.
Reporting and Analytics: These tools help with year-end reporting, comparative benchmarking, custom calculations, approval flows, and more.
Self-Service Tools: These tools allow managers and employees to access important information without the help of payroll or HR teams.
Integrations: Our solution integrates with many of the general ledger or time-tracking software you already use.
Service and Support: WE offer unprecedented U.S.-based support with no call centers and a dedicated point of contact to provide high-touch service to each client.
When you are ready to grow, Proliant is here for you. We offer various tools that can be added on to your payroll solution as your business expands and needs change:
Applicant Tracking and Recruitment
HR & Benefits Administration
Time & Labor Management
ReadyPay Today (Earned Wage Access)
Request a meeting with one of our payroll and HR professionals to learn more about worry-free payroll processing and solutions to streamline your administrative processes.