Payroll Service

FAQ - Will the government accept a PEO as an "Employer of Record" for my business?




The answer is: YES



PEO operates in all 50 States. Many states provide some form of specific licensing, registration, or regulation for PEO's.

The states statutorily recognize PEO's as the employer or co-employer of worksite employees for many purposes, including worker's compensation and state unemployment insurance taxes.

The IRS has accepted the right of a PEO to withhold and remit federal income and unemployment taxes for worksite employees.



For government, a PEO:

  • Consolidates several companies' employment tax filings into one.
  • Provides more professional preparation and reporting.
  • Accelerates collection of taxes.
  • Extends access to medical benefits to more workers.
  • Provides access to 401(k) retirement savings opportunities to more employees.
  • Improves the communication of government requirements and changes to small businesses and their employees.
  • Reduces litigation by resolving many problems before they reach court.
  • Allows government agencies to reach businesses through a single-employer entity


Source (NAPEO 2007 brochure).


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