Most successful small business owners realize at one time or another that they can’t keep managing every aspect of their business. Having employees is a great sign of growth. It also comes with a lot more work and responsibility. Payroll functions for small business owners are an arduous undertaking. It is usually payroll duties that end up being outsourced first when things reach a breaking point. But now many payroll service companies are all also offering PEO services. This is very confusing to the casual payroll or PEO shopper. When it comes to a PEO vs. payroll service conversation, it’s easy to be befuddled. Which is the right road for your small business? Do you need a PEO or a payroll service? Can you have both?
Figuring out the right solution for your small business is about deciding what you need to keep growing. It might be that doing payroll yourself eats up a lot of your time but what about other aspects of employee management? Are they stealing time away from your small business growth strategy?
How Do I Know If I Need A PEO Vs. Payroll Service?
When you explain the all-encompassing solution that a PEO is for a small business, the initial objection is it seems like swatting a fly with a hammer. Many small business owners will balk at the idea of a PEO doing so much for their business. Small business owners like to stay in control of their businesses, making the idea of delegation very hard to accept. It is in the delegation that a wise small business owner is able to find freedom. No one person at your business can do it all and get anything done well. If you’ve taken your small business to the point where you know things are falling by the wayside and you can’t keep up, that’s good. It’s just time to get some help now.
Let’s talk about what a PEO and a payroll service have in common. Both a PEO and a payroll service will take over all of the aspects of calculating payroll, payroll processing, and payment. They’ll also process and distribute all of your W-9s for you at the beginning of the year. For a lot of small business owners, that sounds great. That’s why companies like ADP have been around for so long. What a payroll company won’t do is pay your payroll taxes for you. They are not responsible for your obligations to Uncle Sam. A lot of small business owners find themselves underwater in this area. This little procrastination can become a big problem for small business owners if it is left too long. You have to decide for yourself how well you are doing in the tax department.
How are you doing with employment law around pay, pay rates, state laws around breaks, etc.? A payroll company is also not going to help you with any of that. It may not seem like a big deal until an employee files a complaint with the state over your ignorance of the laws. A PEO is responsible for ensuring you are compliant in these areas. They also do all of the payroll tax management as well. If you need a total solution around payroll, compensation laws, and payroll tax compliance, a PEO is the better choice. When it comes to PEO vs. payroll services in these areas, there’s just no comparison.
What about Workers’ Compensation and health and welfare benefits for your small business? Are you managing all that on your own as well? These are the common other key areas that either go neglected in a small business or are not there when they should be. A payroll service is not going to help you with either of those, but a PEO will. If what you really need is an HR solution, there is no question a PEO can do that.
When A PEO Is Also A Payroll Solution Is It The Right Choice?
If you are already working with a payroll service who is also a PEO, you’ve probably received phone calls about upgrading to a PEO service. The proposal may have caught you off guard if you are not really familiar with what working with a PEO entails. Just because your favorite payroll service is also a PEO, it doesn’t mean it is the right PEO for your small business either. With hundreds of choices for PEOs, there is a dizzying amount of options. Where do you start? A PEO broker like PEO Spectrum will help you make the right choice for your small business. If you’d like to find out more about a PEO vs. payroll service for your organization, contact us today for a free consultation. Get payroll off your mind and into capable hands so you can keep your business growing.