Employee Leasing Quotes : PEO Blog

You’ve heard from friends and other business professionals about Employee Leasing/ PEO services. Maybe you were called or received some information about it. While there are many factors that go into to the decision of whether Employee Leasing can benefit your business, understanding the raw numbers is a good start.

As a business with employees (assuming you are required to carry workers’ compensation), you have five cost factors you’ll want to take a close look at:

1. FICA – A combination of Social Security and Medicare
2. FUTA – Federal Unemployment Tax
3. SUTA – State Unemployment Tax
4. Workers’ Compensation Costs
5. Administrative Costs

The five cost factors are the same five used in any Employee Leasing proposal. In fact, no matter who handles your payroll or workers’ compensation insurance, these will exist.  So from a numbers perspective alone, how can you see if they add up in your favor?

The first two numbers you can easily compare would be FICA – 7.65%, and FUTA - .80%. These are charges that everyone, no matter how big or small the company, pays at the same rate.

That leaves us with three variables to dissect, so let’s take a look at each one.

Your SUTA rate can vary based on unemployment claims against your business. The more money you pay into your company’s SUTA fund and the fewer claims that are being withdrawn against it, the more your rate will drop over time. For example, as a new business in the state of Florida, your SUTA rate starts at 2.70%. The amount of payroll you have (which affects how much you’re contributing to the fund) and how many people are awarded unemployment against your company are the deciding factors in whether your rates increase or decrease.

Workers’ compensation premiums are adjusted using the same principles as unemployment. Workers’ compensation rates also vary based on the risk of the work that is being performed. In other words, a secretary is less likely to be injured performing his or her everyday duties than a roofer, therefore the secretary’s rate will be significantly less. Again, the amount of payroll you report (which affects your contributions to the workers’ compensation policy) and the claims made against your policy are the keys to whether a business’ workers’ compensation rates will increase or decrease.

That leaves us with the administrative issue. When you have employees, you consistently have tasks that someone has to deal with. These include payroll and timely reporting, deposits, child supports or other garnishments. Also to be dealt with are unemployment claims, overtime, bonuses and vacation pay. Workers’ compensation paperwork and audits can be extremely frustrating and time consuming, as well. If your business provides employee benefits, someone in the organization has to dedicate time to answer regular questions, help file paperwork, make phone calls, etc.

With over 60 business regulations an employer must comply with, the U.S. Chamber of Commerce reports the cost of a company’s administrative work ranges between 4%-12%. This varies based on employee count, office locations, whether a company provides benefits or not and many other factors.

Remember, there can be a number of reasons outside of the five factors that make choosing an Employee Leasing company beneficial. Understanding the core costs, though, will help you at the starting line.

Employee Leasing Quotes was created to help businesses choose an Employee Leasing company that fits their unique needs. Please call if you’re interested in seeing what advantages an Employee Leasing company can do for your business. We can be reached by calling 1-888-582-8388 between the hours of 8:30-5:30 EST.

Employee Leasing services offer a co-employer relationship with a business owner to share certain responsibilities. The employer continues to handle the day-to-day activities of the employees, while the Leasing Company manages the time-consuming and complex issues of Workers’ Compensation, employee benefits, HR, and payroll. In other words, you do exactly what you got into business to do, and outsource the garbage work (that’s still just as critical)-to someone else!

Over the past decade the Employee Leasing industry has been growing at a rate of over 30% a year- and according to the U.S. Dept. of Labor by the year 2020, more than half of all American employees will be employed by Employee Leasing Companies!

Employee Leasing services have dramatically increased the number of subcontractors. More competition has helped keep building costs down, and makes new construction an attractive opportunity for buyers. Obviously, interest rates and other factors play a part in the process, but as you read on and look at the benefits and success of Employee Leasing, the link from one industry to the other has had a positive effect for many.

Contractors specifically have been flocking to Employee Leasing Companies for 3 main reasons:
• Workers’ Compensation costs- The insurance industry makes it virtually impossible for a small start-up to mid-sized contractor to obtain Workers’ Compensation coverage- even though it’s required by law in every state (except Texas)! Employee Leasing Companies provide coverage for the smallest of businesses, with very little or no up-front fees and deposits.

• Benefits- Smaller businesses also need access to more affordable, comprehensive employee benefits to compete for talented employees. Employee Leasing Companies allow access to an array of benefits that may otherwise be difficult to obtain.

• Less Paperwork and Liability- With over 50 employment-related governmental regulations, small and mid-sized businesses need help. The majority of businesses don’t have comptrollers, controllers, lawyers and accountants on staff! Employee Leasing Companies reduce the time and cost process substantially by handling hundreds of payrolls for companies and buying Workers’ Compensation for thousands of employees!

Did You Know? The average small business owner spends up to 25%  of his or her time handling employee-related paperwork (U.S. Business Administration) and 1 out of every 3 businesses pay fines and penalties on payroll taxes (I.R.S)!

Employee Leasing services have given employees the opportunity to become employers and be competitive right away by providing affordable, comprehensive solutions to managing a business. When a business owner can handle payroll, Workers’ Compensation and benefit issues on a cell phone at the job site in just minutes per week, you can see why Employee Leasing services are growing so fast!

For more information about Employee Leasing services, visit Employee Leasing Quotes, or call
1-888-582-8388.

With Employee Leasing/ PEO services growing at a healthy 25-30% rate a year for several years now, the word is out on the benefits of outsourcing. So when choosing the right Employee Leasing company becomes the goal, look closely at a few important factors to make sure you’ve chosen the right partner.

1. Pay close attention the marketing material the Employee Leasing company has. A company’s website, brochures and business cards can give you immediate feedback as to what kind of industries they serve.
2. Find out how long the Employee Leasing company has been in business. Are they registered with the state? There have been bad apples among the trees over the years, just as any industry has. What local or national trade associations are they a member of?
3. Who is their workers’ compensation carrier, and for how long? Like any other business, Employee Leasing companies face yearly workers’ comp audits, and if the insurer finds bad claims and management, a renewal is not awarded. Obviously without workers’ compensation they can’t continue to operate, and the scramble begins to find a replacement. If a company has had several carriers over the years, you need to know why.
4. Does the workers’ compensation policy cover your employees when working out of your state?  Many of the policies don’t provide this coverage, so it’s important that you ask. Also, find out specifically what types of deductibles apply if claims occur.
5. Ask if your rate drops when the $7,000 Federal and state unemployment tax caps are met on employees. A large percentage of Employee Leasing companies continue to bill at the same rate throughout the year. While one particular Leasing company’s rates may look lower than the others, if they don’t lower your percentage on these taxes, you could end up paying much more in the end.
6. Compare the little numbers, such as new employee setup fees, minimum payroll run fees- even delivery costs can vary dramatically. A difference in delivery fees of only $10 a week is a $520 disparity between companies over one year.
7. If employee benefits are important to your company, make sure they are suitable for where your employees live and work. Even companies like Aetna or Blue Cross Blue Shield have areas where coverage is limited. Having benefits that require lengthy travel dampens the perk.
8. Get references. It can require a great deal of time, depending on the size of your company, to begin using the services of an Employee Leasing company. References can calm a lot of fears regarding the consistency of payroll delivery, how workers’ comp claims have been handled and the overall service the Employee Leasing company gives to their clients.

The benefits of using Employee Leasing/ PEO services can have an immediate impact on a business’ profitability. Doing your homework up front to choose which company to partner with will determine how much!

Employee Leasing Quotes was created to help businesses choose an Employee Leasing company that fits their unique needs. Please call if you’re interested in seeing what advantages an Employee Leasing company could do for your business. We can be reached by calling 1-888-582-8388 between the hours of 8:30-5:30 EST.

Over the years I’ve dealt with many business owners who confuse Employee Leasing (a.k.a. PEO services) with staffing or temporary labor companies. In many cases those same business owners have had experience with one or the other services, but really aren’t familiar with the differences. So what are they, and how do each benefit employers?

To begin with, an Employee Leasing company’s main benefit to an employer is to relieve the non-profit producing tasks of dealing with employee administrative hassles- such as payroll, employee benefits, human resources and workers’ compensation. By outsourcing these to an Employee Leasing company, the employer can focus on what they do best and grow their bottom line.

Throughout the years, business owners have faced increasingly escalated government rules regarding employment. Employee Leasing companies assume many of these responsibilities and provide expertise in human resource management.

An Employee Leasing company is typically the most cost-effective option for an employer when the business owner has five or more full-time employees. Costs related to workers’ compensation, unemployment tax and payroll administration are much less in comparison to a staffing or short-term employment arrangement. As you can imagine the more employees as a business has, the more time has to be devoted to employee issues- therefore the value of outsourcing this work becomes a more profitable decision.

A business can benefit by using a staffing or temporary help service in variety of ways, as well. The obvious advantage is the ability to access short-term help immediately. Whether it is a construction project with a timeline that requires temporary labor, or a secretary who takes a leave of absence for an extended period of time; accessing pre-qualified help at a moment’s notice is when these services can be an employer’s best friend.

The administrative costs such as payroll, unemployment taxes and workers’ compensation are handled by the staffing company. The employer also relieves themselves of any benefit requirements like health care, vacation, sick or holiday pay. But, there is a premium to pay for these short-term employment services. The overall employee-related costs will be much higher including fees that are added for using staffing companies. The added risks and administrative costs for the services they’re providing is exactly why staffing companies are to be used as a temporary solution.

Just as convenience and grocery stores fill a specific need, the services that Employee Leasing and staffing companies provide (although different) are an invaluable resource for businesses.