How to Choose Between A PEO or Payroll Service


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Having a business of any kind comes with many responsibilities, and at some point, owners come to realize they can’t manage every aspect of their business. Growth is a goal most business work towards, but that also entails more work and responsibilities as well. Payroll is usually the first task businesses will outsource as it requires time and attention to detail, two things business owners need to direct to other aspects of the business.

Payroll service companies and PEOs can help businesses accomplish this, so how do you choose? Many payroll companies have started offering services that PEOs cover, which can make the decision more confusing. If you plan on growing your business, there may be other areas such as employee management you’ll eventually need to outsource as well, so it’s important to find the right solution in order to grow successfully.

PEO vs. Payroll Service

PEOs will take over many aspects of your business, including human resource functions, payroll, risk management, and more. Some small to mid-sized businesses don’t like the idea of delegating that many responsibilities over to another company, but it’s important to remember that you still have control of your business when partnering with a PEO.

PEOs and payroll services both take over all aspects of calculating payroll, payroll processing, and payment. What a payroll company won’t do is payroll taxes for you. Although a payroll service will take some responsibilities off your hands, you’ll still have to do the bulk of other responsibilities. It’s up to businesses to decide how well they are doing in the tax department, or whether that task is a deal breaker.

If taxes and compliance with state regulations are what’s causing you to spiral, then a PEO may be the better choice. They are responsible for ensuring you are in compliance, and will handle payroll tax management as well. If you need a total solution to payroll, laws and regulations, and tax compliance, a PEO is the better choice.

Switching from Payroll Service to a PEO

If you already work with a payroll service who offers PEO services, it’s likely you’ve received phone calls about upgrading to a PEO. Or maybe you’ve come to a cross road where your payroll provider has helped you, but you find yourself needing an HR solution. working with a PEO can help you invest in your business by allowing you to grow and focus on giving your employees competitive benefits, along with handling payroll and other HR related needs.

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