PEO Pros

Workers' Comp Insurance – PEOs

Client Profile: Southeastern Data

Southeastern Data is one of the most unique businesses in Central Florida. From their website:

“Since 1996 Southeastern Data has provided recycling & remarketing of of all types of computers & electronic equipment. We offer pickup service across the nation and to a number of locations outside of the country.

Southeastern Data is an expert at recycling all forms of electronics and equipment. We also offer wholesale pricing of refurbished and new-old-stock items at our warehouse location in Oviedo, Florida. Our warehouse is open to the public Monday-Friday, 8:00 A.M. to 5:00 P.M. with other hours available by appointment.”

Allan Jackson, owner and CEO tells us “I wish I’d known about PEOs when I got started. I could have avoided a lot of headaches in our first year of business associated with managing payroll and taxes, but the real benefit early on would have come from expert help with basic HR issues such as unemployment and workers comp insurance. The time and money that I used to spend on that is now completely focused on the business. It’s been a huge upgrade! I also can’t say enough about PEO Pros in helping me find the best PEO solution for our needs at every step in my company’s evolution. My best advice for moving to a PEO relationship would be to make PEO Pros your first call.”

We are also clients of Southeastern Data. We have purchased all of our office computers and other tech items from their high quality collection of previously owned equipment.

7.5 Employer Myths that Can End Your Business

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 …