FAQ - Prefer Do my Own Payroll
My company doesn’t want to use a PEO, what do I do now?
If your company is NOT considering using a Professional Employer Organization or is considering leaving your current PEO to do things "in-house", here is a quick check list of things to get done.
Establish your federal payroll tax (FEIN) withholding account.
establish applicable state tax withholding account(s).
- Establish a Federal Unemployment tax (FUTA) account.
- Establish a State Unemployment tax account.
- Determine risk type for workers (workers compensation classifications) and shop for Workers' Compensatio insurance.
- Purchase Workers' Compensation coverage and pay up front for at least three months of coverage.
- Ensure your payroll system is set up to file Federal forms including W-2s, W-3s, W-4s, 940s and 941s (quarterly).
- Obtain, prepare and file Immigration & Naturalization I-9 forms (new versions) for existing staff and new hires. Handle any respondent No-match letters from the Social Security Administration (SSA).
- Handle paperwork and assume employer liability for all court orders, wage garnishments and tax levies. Ensure levy deduction priorities are followed.
- Submit reports for New Hire Reporting to State Agencies.
- Determine your company’s willingness to contribute to employee benefits.
- Research, price, compare, obtain and monitor employee benefits which might include medical, prescription card, dental, life insurance, AD&D, disability coverage, Employee Assistance Program (EAP) and Credit Union. Determine and communicate effective date of new coverage for employee benefits.
- Ensure 1993's Health Care Financing Administration (HCFA) filing requirements are met along with administrative requirements associated with the new 1997 Health Insurance Portability and Accountability Act (HIPAA).
- Recognize your liability and implement policies to ensure compliance under the ADA, Title VII (EEOC), Civil Rights Act of 1991, Fair Labor Standards Act and Age Discrimination in Employment Act.
- Make arrangements to set up and manage reporting requirements for IRS Section 125 (Cafeteria) plan if you intend to keep this tax advantage.
- Make arrangements to set up a 401(k) plan . (Be aware of the differences between Highly Compensated Employees (HCEs) and your other workers since you will not be part of a "large employee base" plan).
- File Federal Form 5500 for your 401(k) plan.
- Analyze your cash flow to account for the switch from a scheduled budget allocation for employment services to irregular payments and periodic lump-sum amounts for these services.
- Implement a payroll solution with either an in-house software solution or a service bureau. Ensure all payroll and tax withholdings are accurate.
Because a PEO offer relief from many of these business related challenges, thousands of companies across the USA are now using a PEO to help make their business more successful.