Category HR News

Some of our partner PEOs are offering a new service to their client employees.

This new service, called the Online Degree Navigator, allows people to search a variety of online degree offerings from one website.

We expect this program to become very popular with our partner PEOs, especially with the focus on advancing education. With one click to a website, PEO employees can now select from a wide variety of online degree course offerings.

If you would like to offer this to your employees, please use the contact form below:

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When is a worker an employee and when is a worker an independent contractor?

Employers worry that they may have an independent contractor that is actually an employee. Please remember this important fact: There is no such thing as a 1099 employee.

The worker is either an employee, requiring tax withholding and an issued W-2, or they are an independent contractor.

Things change from state to state. We are asked this question quite often by our payroll consulting clients, not only here in Orlando, but throughout the state of Florida and even nationwide.

Here is a list of questions the state of Florida uses to determine the status of a worker:

A “Yes” answer for the following questions indicates that the worker is an employee:
1. Does the business provide instructions to the worker about when, where and how he or she is to perform the work?
2. Does the business provide training to the worker?
3. Are the services provided by the worker integrated into the business’ operations?
4. Must the services be rendered personally by the worker?
5. Does the business hire, supervise and pay assistants to the worker?
6. Is there a continuing relationship between the business and the worker?
7. Does the business set the work hours and schedule?
8. Does the worker devote substantially full time to the work of the business?
9. Is the work performed on the business’ premises?
10. Is the worker required to perform the services in an order or sequence set by the business?
11. Is the worker required to submit oral or written reports to the business?
12. Is the worker paid by the hour, week or month?
13. Does the business have the right to discharge the worker at will?
14. Can the worker terminate his or her relationship with the business any time he or she wishes without incurring liability to the business?
15. Does the business pay the traveling expenses of the worker?

A “Yes” answer for the following questions indicates that the worker is an Independent Contractor:
16. Does the worker furnish significant tools, materials and equipment?
17. Does the worker have a significant investment in the facilities?
18. Can the worker realize a profit or loss as a result of his or her services?
19. Does the worker provide services for more than one firm at a time?
20. Does the worker make his or her services available to the general public?

Confusing? Yes. Is it risky? Yes it is. The federal government and the IRS are under a directive to reduce the abuse of the 1099 classification. Make sure your contractors are truly independent contractors. If you are unsure, you may want to check with an expert.

If you would like further information from us please call 800.788.8343 or use the form below:

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“I hear people talking about their SUTA, what is it?”

“The state just raised my SUTA rate! What can I do?”

“What can I do about SUTA?”

“My Accountant just told me I should consider a PEO because of my SUTA rate increase.”

Have you wondered what this acronym stands for?

• SUTA = State Unemployment Tax Act. Similarly,
• FUTA = Federal Unemployment Tax Act.

It is a tax assessed on employers to fund unemployment benefits. It is often (wrongly) called “Unemployment Insurance” or “SUI.”

The term SUTA is often used to refer to the employer’s SUTA rate, that is, the percent of payroll that is assessed on that particular employer.

Most states start new businesses at an arbitrary base rate, and they stay at that rate until a significant amount of employment history is acquired.

In Florida, for example, a new business is assigned a SUTA rate of 2.7% of payroll for the first 30 to 33 months. After this, the rate may fluctuate up or down based on employer experience. The current maximum in Florida is 5.4%

In contrast, the FUTA rate is a constant 0.8% and does not change per employer.

Both rates have a maximum wage applicability. In Florida, the SUTA rate is only applied to the first $7,000 of each employee’s wages with that employer. (FUTA also only applies to the first $7,000.)

Why is this Important When Considering a PEO?

When an employer turns his employees over to a PEO (formerly known as an Employee Leasing Company) they now fall under the SUTA rate of the PEO.

Obviously, in some cases, this can be beneficial to an employer who has had an unusually bad experience with unemployment. It can also be of great assistance to have a Professional Employer Organization to direct the employee hiring and terminations in a way that limits exposure to unemployment claims.

In any case, transferring the responsibility of the Unemployment Claims from the client company to the PEO makes unemployment claims “somebody else’s problem.”

Would it comes as a surprise that small to medium business owners are dealing more with unemployment issues these days? Wouldn’t it be great to hand those problems off to someone else?

With the services of a PEO, where the PEO becomes the “employer of record”, it is no longer the client’s responsibility to deal with unemployment issues (such as claims and UE taxes.) That all becomes “Somebody Else’s Problem” (the PEO’s) and the client can continue to build their business.

Allan Jackson, owner of Southeastern Data, explains (in the video below) how a PEO got rid of his unemployment problems in the video below. Southeastern Data is entering their third year as a client of a PEO (placed by PEO Pros.)

This article is an outline of a talk that our CEO gives to various groups. Please contact us if you are interested in such a talk

Myth # 7: “I don’t need to be on my payroll – I can take distributions.”
Our CPAs have always advised us that even though Subchapter S corps and LLCs allow “distributions” to owners, the IRS expects you to run a payroll and use those distributions for special or unusual circumstances. A failure to run a payroll regularly can “raise a flag” on your return, which may make you subject to an audit.

Myth # 6: “If I have Workers’ Comp insurance claims don’t affect me.”
While it is true that in most cases the full burden of the claim falls upon the insurance company, it is important to remember that an “experience modifier” follows your corporation or business entity throughout its lifetime. Excessive claims can raise this modifier, which will correspondingly raise your workers’ comp premium.

Myth # 5: “A payroll service will relieve me of the worry of paying payroll taxes.”
Some payroll services, especially PEOs, who legally become the employer of record, can certainly mitigate the liability associated with payroll taxes. With a standard payroll service however, it is your FEIN that goes on the return and hence you will be audited if there is a problem. It is true that a reputable payroll service will “stand by your side” at the audit but you will still have some, if not all, of the responsibility. In a PEO situation the lion’s share of the liability rests with the PEO since it is their FEIN that is on the return.

Myth # 4: “Unemployment Claims do not cost me time or money.”
This gets monitored much the same way workers’ comp claims do. The state will keep a record of your claim history and can adjust your rate up or down on an annual basis. Certainly managing your employees properly and terminating them according to correct procedures will reduce your unemployment rate exposure.

Myth # 3: “We have our posters up so we are in compliance.”
Oh really? How old are those posters? Have you checked with all the state, federal and local authorities? Wouldn’t it be nice to have someone do that for you?

Myth # 2: “I’m exempt from Workers’ Comp because I don’t have enough employees.”
This is a great misunderstanding. NO ONE is exempt from Workers’ Comp in the United States of America. If an employee is injured on the job it falls under the Workers’ Compensation Act and the employer is responsible for all medical, legal, and administrative expenses involved with the claim, as well as paying lost wages from time out of work, typically two-thirds of the normal wage.

In most states, you may apply for an Insurance Exemption, which allows you to be self-insured. This depends on the number of employees. In Florida it is 3 or fewer employees besides the owners, or 1 employee in the construction field. You may be “exempt” from having an insurance policy but you still are subject to workers’ comp.

Myth # 1: “I don’t have employees, all my people are 1099 contractors.”
There is no doubt that many people in a contracting situation legally and are truly 1099 contractors. However, this is one of the most widely abused categories in the employment arena today. The 1099 is meant for those people that are truly independent, NOT just a way to avoid paying taxes.

Myth # .5: “I can do it without professional help.”
Good luck with that 🙂

We hope you will view us as a resource. You probably don’t need our services now, but you want the firetruck to know how to get to your house! Some of you might have even “smelled some smoke” while we were talking …

PEO Payroll Services with PAY-surance HR / PEO Pros

One of the most common “employer headache” complaint heard is handling the complicated and changing world of employee payroll and tax compliance associated with having employees.

Jeff Bosworth

“I decided to have PEO Pros find a PEO for me because doing Payroll was so laborious.” says Jeff Bosworth, Orlando area business owner and HR consultant. “It was a constant problem. I’m a firm believer that you pay people for professionalism.”

Handling payroll and ensuring employee tax compliance is a major benefit of working with a PEO. In addition to ensuring compliance with all taxing agents in the local, state and federal governments, annual tasks such as issuing W-2s are handled professionally. It’s important to remember that a PEO uses their own FEIN and it becomes their responsibility to comply. This is a favorable transfer of liability for business owners.

In addition to representing PEOs, PAY-surance HR also functions as brokes for Administrative Service Organizations (ASOs), more commonly known as Payroll Companies.

Payroll Services are available in three ways:

* From a PEO as a PEO client
* From a “payroll company” as an ASO client
* As a service from a PEO using the ASO model

In all of these cases, PEO Pros has the staff and expertise to find you a feasible solution.

Our staff has taken on the incredible task of sorting through the 2900+ pages of the new health care bill – HR 3590.

It is still very early but we believe there may be some advantages to small business owners, those with less than 100 employees.

If you are interested in hearing how this may benefit your small business, please contact us.

“Rick and John’s Weekend Update” is a video blog done by two business owners here in East Orlando. Today’s guest was noted health expert and insurance agency owner Augie Buffa, of I-surance, LLC.

A primary tax that affects business owners is the state unemployment tax assessment (SUTA).

In Florida, a new business is assigned a rate of 2.7%. This rate is charged on the first $7000 of each employee’s annual payroll.

After 10 quarters the business SUTA rate is subject to review, and may increase or decline, based on unemployment claim history.

Many business owners would rather not worry about this tax and instead leave this employer headache to a PEO, who will become the employer of record in a co-employment situation.

In that case, by using a PEO to handle your HR issues, these headaches literally become “Somebody Else’s Problem” – SEP!