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  • The Internal Revenue Service (IRS) has recently announced a 90-day pre-audit window to correct retirement plan errors. The program will allow for plan sponsors to be notified that the IRS has selected them for an upcoming examination and to allow them to correct errors they may have made.

    The 90-day window will allow plan sponsors to fix errors, so they do not have to pay a penalty fee or pay a lower fee for voluntarily correcting any errors. If the plan sponsor doesn’t respond, the IRS will commence with an examination.

    If a business makes changes and the documents support those changes, the IRS will issue a closing letter ending the investigation. The IRS could conduct a limited or full-scope examination if they still have reason to believe there are issues. Some mistakes are not eligible to be self-corrected, but a closing agreement can be requested. The Voluntary Correction Program fee structure will be used to determine the amount a business will pay under an agreement.

    Before this program, the ability to fix errors prior to an IRS judgment was typically not available. Errors found by the IRS resulted in much higher fees and were less predictable than they are under this new pilot program.

    The IRS states that the “goal with this program is to reduce taxpayer burden and reduce the amount of time spent on retirement plan examinations.” Once the pilot is over, the IRS will determine if it should become a new policy as part of its overall compliance strategy.

    How GMS Can Help

    While this policy helps businesses by giving them a window to correct errors, a professional employer organization (PEO), like GMS, can help eliminate these errors in the first place. That way, you don’t have to spend more money working with attorneys and advisors to conduct the self-audit after receiving a notification. Not only will it save you money to partner with GMS, but it will also save you valuable time that you can focus on operating the key facets of your business. Contact GMS today.

  • The IRS Form 941, also known as Employer’s Quarterly Federal Tax Return, was scheduled to change in June 2022. Previously, Form 941 was only updated in March for the first quarter reports. Now, the IRS has extended it to the second, third, and fourth quarters.

    Employers use Form 941 from the IRS to report income taxes, social security tax, or Medicare tax withheld from employee’s paychecks. Without this report, the IRS would not know if you deposited your employment taxes on time.

    Changes To Form 941-X

    The new report, Form 941-X, only has two worksheets that must be turned in versus several forms needed to be submitted for Form 941. The IRS also updated changes to Form 941-X to match the changes from Form 941.

    How GMS Can Help

    Dealing with taxes can be complicated and can take away focus from your business. Outsourcing payroll administration will provide you with a team of experts by your side to give you dedicated support, proprietary technology, and operational efficiencies. Contact us today to learn how you can benefit from partnering with a PEO for your payroll needs. 

  • Anthem, a large health insurance company, and Northside, an Atlanta hospital system, go head-to-head in a legal controversy in Georgia’s Supreme Court that could impact the state residents’ healthcare.

    In May 2021, Anthem decided to terminate Northside from its network due to the Atlanta hospital system billing overwhelming funds to Anthem. According to Insurance Newsnet, “One legal issue centers around the definition of “public health emergency.” That is because the General Assembly passed a law during the 2021 session prohibiting insurers from dropping health-care providers from their networks during and for 150 days after a “public health emergency.”

    A public health emergency, as declared by the city, the state, or the Federal Government, is an occurrence of a threatening illness or medical condition caused by an epidemic, pandemic, or an infectious agent. In the lawsuit, representatives of Anthem and Northside argue for different definitions for a public health emergency. Anthem argues for a “narrow” definition of a public health emergency meanwhile Northside argues for a “broad” definition of a public health emergency.

    What This Means For Georgia Residents

    It is possible that both parties may not be able to negotiate and reach an agreement, affecting Georgia Residents. With the extension of this case in the state Supreme Court, a decision will be made within the next six months. A public health emergency dispute that cannot be resolved affects state residents not only disrupts medical treatment but the collapse of healthcare facilities and systems, use of prescribed medications, and disrupts health surveillance and programs.

    How GMS Can Help

    Here at GMS, we have experts to assist with any healthcare inquiries you may have. Having an expert team by your side can be extremely beneficial for you and your employees. Let us assist in finding you the best healthcare plan, so you can focus on growing your business. Contact us today!

  • Considering the recent healthcare regulations, now is a better time than ever to consider a self-funded health plan. Self-funding your health insurance is a long-term strategy to save money, gain total control over your plan, and may offer immediate savings.

    It is a common misconception that self-funded health plans are only advantageous for large employers. In a traditional self-funded arrangement, small employers weren’t able to absorb the risk of becoming self-insured due to potential losses. By self-insuring your plan coupled with a stop loss policy (also known as a catastrophic policy), you mitigate your financial risk while allowing your plan to reap all benefits. Stop loss policies allow employers to evaluate potential savings and maximum exposure by becoming self-funded. Prior to stop loss insurance, the potential savings were estimated, and max exposure was unknown.

    Group Management Services offers stop loss insurance that allows small employers to be rated on their own medical applications while experiencing savings due to our economies of scale. This means we can offer lower stop loss premiums due to our volume, but your premiums aren’t affected by other plans should they not do as well as yours.

    Image of a business owner who switched to a self-funded health insurance plan.

    Various Benefits Of Self-Funding

    • Transparency. Self-insuring allows employers to view all costs paid by the plan.  These costs include fees for administration, broker, network access, and actual claims data. This knowledge allows employers to accurately evaluate their costs, and identify the areas they can potentially save more money.
    • Tax. Self-insured plans are not subject to premium taxes.
    • Use of capital. Rather than paying your monthly premium to a fully insured carrier, self-funding allows you to hold a good portion of this capital. Let’s say your plan has an annual premium of $250k with your fully insured carrier. By switching over to a self-funded plan, your total annual premium costs have now decreased to $60k with a max claim liability of $180k. This means you are now only paying $5k monthly in premium (instead of $20k with your current carrier), and funding claims up to a max total of $180k throughout the year. Since your max out-of-pocket by being self-funded is only $240k (premium plus claim liability), you’re already guaranteed to save $10k. The $180k in claim liability stays in your bank account, allowing employers to utilize this capital until needed to fund claims.
    • Pay only for actual claims; not the total expected claim level from a fully insured carrier. On a fully insured plan, you know you’re paying the total monthly premium regardless of claim experience. If your self-funded plan runs extremely well throughout the plan year, any amount left over in your claim liability is additional savings to the plan. If your plan only experiences $120k in claims, the $60k left over in the claim fund is additional savings for your plan. Does your fully insured carrier offer you a refund at the end of a good plan year? If they do, are they keeping a percentage of your savings?
    • Limit the surprises. Fully insured plans don’t typically notify the employer of high claims until the renewal period. By that point, you can anticipate a heavy increase due to claim experience. Self-insured plans allow for employers to be notified of plan expenses on a weekly basis throughout the year. This is extremely valuable for plans to know if an early renewal is beneficial and other options to assist the employer and the members.
    • Let us share the risk. By offering stop loss insurance on your plans, GMS has every incentive to properly monitor your claim volume and accuracy. We are responsible for reimbursing your plan for all claims paid over your maximum liability. Therefore, we work closely with employers and their members to keep costs in line.
    • Tailor the plan design. Self-funding allows employers to decide what plan options are most advantageous for their members without having to pay for unnecessary add-ons.

    Enjoy the Benefits of Self-Funding

    Self-insuring your health plan provides a copious amount of advantages, allows you to effectively evaluate costs, and offers substantial savings. The figures used in the example provided are from an actual proposal to one of our clients. Don’t take my word for it; the numbers speak for themselves. Contact us today to speak with our experts to learn more about a self-funded plan.

  • As the U.S. continues to experience rising inflation, there is immense pressure for business owners to increase employee wages. As of June 10th, the U.S. Department of Labor (DOL) reported the inflation rate reached 8.6 percent

    The Continued Workforce Shortage 

    The gap between job openings and available workers has continued to widen. The unemployment rate within the U.S. hit over 5.5 million in the month of April. This equates to two jobs per every unemployed worker. The continued pressure on wages has created an increase in the consumer price index (CPI). The CPI has risen to over 8.5% — biggest price 12-month increase since 1981. The labor shortage combined with inflation has become detrimental for businesses.

    The Rising Cost 

    Workers have begun taking advantage of the tight labor market. Despite the unemployment rate falling in recent months, the U.S. is still enduring a major gap. As inflation continues to rise, employee take-home pay holds less buying power. The recent surge in inflation leaves employees desiring more wages and benefits. As a result, employers are now offering increased compensation in hopes of attracting top talent, while remaining competitive. 

    According to SHRM, the average budgeted salary in 2022 climbed to 5.2 percent, compared to 4.5 percent last year. Many companies must adjust where budgets are typically set in advance. To keep key employees, some businesses are planning a midyear pay increase and salary adjustments – in addition to annual raises. While employers continue increasing salaries to retain their top talent, they must implement changes to attract new talent.

    Employee Benefits Options

    One way to remain competitive within the current market is to offer perks beyond salary adjustments. Companies are providing remote working options, providing gift cards to their employees for gas and groceries, and increasing bonus opportunities. Other organizations are offering additional perks such as student loan reimbursement, daycare options, or fertility benefits. These investments have a payoff as employees want to feel supported and appreciated.

    How GMS Can Help

    Due to rising inflation, it is vital for employers to remain competitive. When you partner with GMS, our HR experts can help you attract and retain top talent. Along with providing you top-of-the-line benefits, while ensuring the lowest rate. Our team supports your business through all unprecedented times and ensures your business has all the tools to remain competitive and successful. Contact us today to learn more.

  • The House and Senate passed the American Rescue Plan Act of 2021 in effort to temporarily expand eligibility to pay for health insurance through 2022. As a result of this act, Production Tax Credits (PTCs) were formed. According to Insurance NewsNet, “For Florida, the number of uninsured residents would grow by 24.8% according to the estimates in the study. It would also mean a five million dollar drop in total spending on health care for non-elderly residents in the Sunshine State.”

    Before the ARPA (American Rescue Plan Act of 2022), Congress implemented the Affordable Care Act of 2010 that initially started to allow PTCs to be available to states across the U.S. Florida residents make up 513,000 of the three million Americans at risk of losing healthcare coverage since speculation began that the Affordable Care Act wouldn’t be extended.

    Why Florida Residents Are Affected

    Florida falls into the category of a non-expansion state. A non-expansion state does not have to expand access to Medicaid or Medicare eligibility by the federal government. Other non-expansion states include Texas, Georgia, and North Carolina. If the extension doesn’t pass, residents in these states, specifically Florida residents below the federal poverty line (FPL), are more at risk of losing their healthcare coverage.

    According to FamiliesUSA, a healthcare advocacy organization, Florida resident premiums could go up 61% if the PTCs expire or health provisions are not extended. At this rate, health insurance rates would increase to $1.6 billion in 2023. 

    Partnership Benefits With A PEO

    As a business owner, we understand you want to offer your employees the best healthcare plan. By partnering with a PEO, we can offer a benefits plan sponsor that includes benefit coverages, a flexible spending account, a comprehensive 401(k) plan, and more. You will have access to a team of experts who will answer any questions you may have. Contact us today.

  • Medicaid is undergoing a major expansion in the state of North Carolina. The bill, H.B. 149, was passed on June 2nd by the North Carolina Senate. This bill will expand Medicaid eligibility, allowing more than 600,000 North Carolinians to receive the life-saving health care they need. In addition to the Medicaid increase throughout the state, the bill contains a certificate-of-need (CON) law that expands nurses’ practice authority.

    The Importance

    One of the major attributes of passing the bill comes from the continued rise of inflation within the U.S. Over the past year, North Carolina has been overwhelmed by the increasing healthcare costs. Senator Ralph Hise, R-Mitchell addressed, “Everything is going up. But with the sector of cost rising farther than anything else, and that has been true for decades, is healthcare; and it’s not even close.”

    Hise mentioned several other factors that support the need for Medicaid in North Carolina:

    • Eight years of solid Medicaid budgets
    • Republican leadership in the General Assembly
    • Reform of the system associated with the Medicaid transformation in 2021

    What It Means

    Over the past year, North Carolina has ranked third in the nation for hospital closures. The bill further pushes insurance companies to cover telehealth visits, along with providing medical billing transparency. Patients must be notified at least 72 hours before a procedure or visit if they have an out-of-network provider.

    The bill also contains the SAVE Act, allowing nurses to practice without a doctor present. Senator Lisa Barnes, R-Nash Stated, “It’s a measure that doctors’ groups have opposed but is targeted to rural areas where staffing shortages have reduced access to health care.”

    How GMS Can Help

    GMS supports your business by ensuring you stay ahead of all legislative changes. As a result of the expansion of Medicaid, there will be various changes throughout the healthcare industry. At GMS, a benefits specialist can find a healthcare plan that gives your employees access to what they need. Contact us today to get started!

  • It’s no secret that health insurance is one of the most important employee benefits. Insurance is also one of the most expensive benefits, forcing small business owners to balance an attractive benefits plan with the costs of offering different medical plans.

    While it can be easy to focus on group health insurance, it’s essential to remember another critical benefit – dental insurance. Let’s break down what types of dental plans employers can offer and how they can benefit your small business.

    What Dental Insurance Options Are Available For Small Businesses?

    There are various options for employer-sponsored dental coverage available for small businesses. These types of dental insurance plans include:

    • Preferred provider organizations (PPO) – Users can visit a network of providers for dental care. Individuals will have co-payments for procedures and can meet a deductible.
    • Dental health maintenance organizations (DHMO) – Users pay their dental network a set monthly fee for preventative care whether they use it or not. A set amount of annual services are covered within that fee, while others require copays or are not covered.
    • Discount or savings plans – Users pay a monthly premium to receive discounts on dental services, whether they are in network or not.

    How Much Does Small Business Dental Insurance Cost For Employers?

    It’s no secret that offering certain benefits is an ample expense for small business owners. Group health insurance alone can cost a business thousands of dollars per employee as premiums continue to rise. Fortunately, dental insurance is a much smaller investment than some other types of benefits.

    As with group health coverage, the exact cost of dental insurance will change for each employer. Dental insurance costs typically vary from $15 to $20 per employee per month depending on the plan of choice and whether an employee needs single or family coverage. Several factors will affect your overall dental premiums, such as your group size, the overall wellness of that group, and other criteria. Once you have your per-employee premium, you can extrapolate that monthly rate to determine your annual expected dental insurance costs.

    Four Reasons Why Small Businesses Should Offer Dental Insurance

    Employees aren’t the only people who benefit from dental coverage. Below are four key reasons why group dental insurance is advantageous for both employers and their workers.

    Recruitment and retention

    According to MetLife’s 2022 Employee Benefit Trends Study, 72% of employees named dental insurance as a must-have benefit. That placed dental insurance as the third-most desired benefit behind group health insurance and a 401(k) or some other form of retirement savings.

    While small business group dental insurance isn’t required by law, it has become a staple for competitive benefits packages across the U.S. That makes offering dental insurance an important, relatively cost-effective benefit that can help your business attract and retain talent.

    Overall employee health

    Dental coverage does more than just help your employees address their oral health. Regular dental visits also play an important role in helping employees stay healthy from head to toe. According to the Mayo Clinic, poor oral health has been linked to several chronic diseases and other serious health issues, including:

    • Diabetes
    • Heart disease
    • Endocarditis
    • Stroke
    • Pneumonia
    • Osteoporosis
    • Pregnancy and birth complications

    By giving your employees the opportunity to receive regular cleanings and other dental care, you can help them maintain their overall health. Healthier employees tend to not only be happier employees but also people who are less likely to use their group health plans for various other ailments.

    An employee covered by small business dental insurance at a routine cleaning.

    Employee productivity and availability

    Simply put, employees who have to take more sick days are likely to be less productive than workers who are in good health. Offering dental insurance is another way that employers can support the overall health of their company.

    Even if your employees are able to come in and work while dealing with tooth pain and other issues, poor health can make employees less effective. Aches, pains, and stress can cause employees to lose focus on the job. According to the Centers for Disease Control and Prevention, personal and family health problems cost U.S. employers $1,685 per employee per year in productivity losses.

    Long-term savings

    Investing in dental insurance for a small business can make a direct impact on your bottom line. To start, healthier employees are less likely to take time off because they’re sick or for additional doctor’s appointments. That added productivity alone can help you get the most out of your workforce.

    Preventative treatment allows you to get ahead of health issues in the long run. Reducing an employee’s chances of developing more severe conditions can save you from costly claims and productivity losses in the future. Research published in the National Library of Medicine suggests that health-related productivity costs are 2.3 times greater on average than medical and pharmacy costs alone. That number alone can make the added investment worth bolstering your benefits plan.

    Help Your Employees Stay Healthy And Productive

    A healthy workforce is happier and more productive workforce. Giving your employees supplemental plan options such as dental insurance is one way that you can strengthen your business. Of course, it’s not always easy to manage benefits administration and every other critical HR function on your own.

    As a Professional Employer Organization (PEO), GMS can leverage its collective buying power to help you offer quality health care benefits at better, more affordable rates. We also give your business access to proprietary technology and dedicated customer service to save you valuable time that you can focus on your business.

    Ready to offer dental coverage to your employees? Contact GMS today to learn how we can help you get the most out of your benefits package.

  • Retirement planning is the process of setting income goals, followed by the actions and decisions necessary to achieve those goals. This includes classifying sources of income, sizing up expenses, implementing a savings program, and managing assets and risk. Retirement planning is the financial strategy you take in saving, investing, and ultimately distributing money meant to sustain oneself during retirement. Planning prepares individuals for life after their income ends.

    Depending on where you are in your life, whether you’re a recent college graduate or five years into your career, your retirement plan will constantly change. If you’ve just entered the workforce, your main goal will be to save a certain percentage of your income. Once you reach the median portion of your career, you may want to consider increasing your specific income or target goals and take steps to achieve them.

    As a small business owner, you may have never thought about offering retirement plans to your employees. If nothing else, consider it as a recruiting tool – employees are concerned about their future and are looking for employers to provide peace of mind. The purpose of offering retirement benefits is to increase the economic security of your employees. Offering one has numerous benefits:

    • Attract and retain quality employees
    • Lower income taxes
    • Supersize retirement returns
    • Payroll deductions
    • Long-term compounding
    • Creditor protection
    • Pre-tax contributions
    • Employer contributions 
    • Roth contributions

    If you are wondering if you should begin offering this type of benefit to your employees, you first want to explore the different options available. Continue reading to see which option(s) might be the best fit for your business.

    Retirement Plan Options

    Traditional IRA

    A traditional IRA is available to anyone offering a wide range of plans and investment options. IRA stands for individual retirement account – meaning, they are tax-favored savings plans that are, for the most part, opened and managed by individuals themselves. Any individual who has taxable income can contribute to a traditional IRA.

    When making contributions to a traditional IRA, it reduces your taxable income while the money grows tax-free until you withdraw it. It is very similar to a 401(k) plan; however, the contribution limits are much lower in a traditional IRA. As of 2022, the contribution limits are $6,000 if you are under the age of 50 or $7,000 if you’re 50 or older. Individuals do not pay income taxes on their contributions, but instead, you pay taxes when you withdraw the money from your account at a specified time.  

    Roth IRA

    The main differentiator between a traditional IRA and a Roth IRA is when you receive the tax benefits. For a Roth IRA, you pay taxes on the money you contribute. This means that when you withdraw your money, you withdraw it tax-free at the time of retirement.

    To decide which plan to go with, the traditional or Roth IRA, experts have said to determine whether you expect to be taxed at a higher or lower rate when you retire. Many individuals create their retirement plans assuming that they’ll fall into a lower tax bracket once they retire. If you feel that you won’t be in a lower tax bracket when you retire, you could pay less income tax with a Roth IRA.

    When contributing to a Roth IRA, you are allowed to withdraw money after the age of 59 ½. However, there are several exceptions to the early withdrawal penalty. Should you purchase your first home, have an extensive amount of college expenses, or have a child, you might be able to withdraw from your Roth IRA with no penalty. With that being said, you are only able to contribute to a Roth IRA if your annual income is below a specific threshold.

    SEP IRA

    A SEP IRA stands for a simplified employee pension. This type of retirement plan is used mainly by self-employed individuals or small business owners. If you’re a business owner, this plan may be cheaper and easier to operate as opposed to a 401(k) plan.

    With a SEP IRA, you have the capability to put away a greater amount of savings each year. An employer can contribute up to 25% of each employee’s income, up to a maximum amount of $61,000, as of 2022. If you’re self-employed, you’re able to contribute up to 25% of your net income up to $61,000. With a SEP IRA, individuals are 100% vested in employer contributions. However, the immediate vesting of employee benefits may be a disadvantage for employers since the employee will take the money with them when they leave.

    Simple IRA

    A simple IRA is a retirement plan option for small businesses with 100 employees or less. Simple stands for savings incentive match plan for employees – meaning, employers must do one of two things:

    1. Match employee contributions up to 3% of the employee’s salary
    2. Contribute 2% of an employee’s salary regardless of any contribution from the employee

    Simple IRA plans offer a substantial source of income at the time of retirement by allowing employers and their employees to set aside money within retirement accounts. The main differentiator between conventional retirement plans is that with a simple IRA, there are no start-up and operating costs.

    With this type of retirement plan, employees are always fully vested which means no matter when the employee leaves the company, they can keep all the employer’s contributions. In 2022, employees can contribute a maximum amount of $14,000 of their annual salary or if they’re over the age of 50, they can contribute up to $17,000.

    401(k)

    The most popular option for a retirement plan is a 401(k). According to the Internal Revenue Service (IRS), a 401(k) is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts. The plan can be a profit-sharing, stock bonus, pre-ERISA money purchase pension, or a rural cooperative plan.

    An employee who signs up for a 401(k) agrees to have a portion of each paycheck paid directly into an investment account. Some employers may decide to match part or even all the employee’s contributions. There are two basic types of 401(k) plans – Traditional and Roth.

    The money in your 401(k) grows tax-free until you withdraw it. Once you choose to withdraw it, you’ll pay income tax on the money you take out. However, you must be 59 ½ or older to withdraw your money from the 401(k) plan without a penalty. You are also required to start withdrawing money from your plan at the age of 72.

    Most employers tend to offer 401(k) plans because they have fairly high contribution limits. In 2022, you can contribute up to $20,500 or $27,000 if you’re over the age of 50.

    Tom Smith, Director of Retirement Services at GMS, stated, “For employees, a 401(k) holds numerous benefits. Contributions are deducted directly out of their paycheck versus the employee having to send money to an account themselves. If their employer matches contributions, then it becomes a no-brainer for the employee to participate because they leave free money on the table if they do not.”

    Solo 401(k)

    A Solo 401(k) assists in maximizing retirement savings for individuals who are self-employed and business owners that don’t have employees. These plans are also known as individual or one-participant 401(k) plans. A Solo 401(k) is very similar to a standard 401(k) plan, except for the ability to boost your savings by contributing as both the employer and employee. 

    Individuals can contribute up to 100% of self-employment income with a maximum amount of $20,500 or $27,000 if you’re over the age of 50. In addition, you can act as the employer since you’re self-insured and contribute up to 25% of your business’ income. This may be the best option for those who are self-insured as you may be able to contribute more with this dual contribution formula.

    Partner With GMS Today

    No matter which retirement plan you choose, they all provide tax advantages as incentives to save for retirement. Now, you may still have a handful of questions and are still hesitant if you should offer a retirement plan to your employees. GMS is here to help. A PEO like GMS can leverage group buying power to reduce plan costs for small businesses and take on the fiduciary burden to ensure you remain compliant. As a business owner, you can stop wasting time trying to make sense of your legal responsibilities when you partner with GMS. With GMS, you easily establish: 

    • 401(k) eligibility requirements 
    • Vesting schedules
    • Tax-deductible matching
    • Profit-sharing contributions

    For more information about offering retirement plans to your employees, contact our experts today.

  • Running a business involves countless moving parts, from managing payroll and taxes to ensuring compliance with federal and state employment regulations. Professional employer organizations (PEOs) exist to ease this burden, handling administrative and human resource (HR) functions so employers can focus on growth. 

    Many businesses may be familiar with PEOs but may ask “What is a certified PEO?” Certified Professional Employer Organizations (CPEOs) go a step further than PEOs by meeting stringent requirements set by the Internal Revenue Service (IRS) and offering clients unique financial protections and tax benefits. PEO companies that are not certified typically do not provide these financial protections.

    CPEO vs. PEO: What’s the difference?

    When comparing a CPEO vs a PEO, the key difference is that a Certified Professional Employer Organization must complete the IRS’s certification process, an extensive evaluation that examines a PEO’s history, financial responsibility, and compliance record.

    While standard PEOs can offer many benefits, certified PEOs stand out because: 

    1. They assume full liability for federal employment tax payments on wages paid to worksite employees.
    2. They must post an annual bond (up to $1 million) that guarantees payment of federal employment tax liabilities.
    3. They undergo rigorous and ongoing IRS reviews and financial reporting requirements.

    By contrast, in a typical PEO relationship, both the client and PEO share liability for certain tax obligations. When partnering with a CPEO, the liability may fall solely on the certified PEO for federal employment tax on wages they pay to your employees. That’s a significant peace-of-mind factor for business owners.

    Ultimately, the CPEO vs PEO distinction comes down to added tax protections, financial bonding, and IRS oversight. 

    IRS guidelines and processes

    The IRS established the Certified Professional Employer Organization (CPEO) program through the Tax Increase Prevention Act of 2014. This was recently clarified by Revenue Procedure 2023-18, which replaced earlier guidance and laid out steps, processes, and requirements in more detail.

    The IRS lays out clear prerequisites to qualify as a CPEO. To become and stay a Certified Professional Employer Organization, a business must: 

    1. Be a business entity with at least one physical location in the United States. 
    2. Demonstrate a history of financial responsibility, organizational integrity, and federal/state tax compliance. 
    3. Be managed by individuals (mostly U.S. citizens or residents) who have knowledge and experience in employment tax compliance. 
    4. Maintain certification annually through online verification, financial reporting, and compliance monitoring. 

    Failure to meet these standards could result in losing the CPEO designation. With the enhanced guidelines, businesses can easily verify a certified PEO’s status by checking the IRS’s public listings of active, suspended, or revoked CPEOs.  

    Why partner with a CPEO?

    Partnering with a Certified Professional Employer Organization like GMS ensures compliance and reduces risk.

    1. Stronger financial protections: As noted, a certified PEO can take on sole liability for federal employment taxes on wages they pay, backed by a significant surety bond, helping protect you from potential tax risks. 
    1. Clear tax benefit retention: If you’re claiming tax credits, a CPEO relationship can help ensure you retain those credits without interruption. 
    1. Enhanced compliance: CPEOs are regularly monitored and regulated by the IRS, which can give you extra assurance that payroll, HR, and tax compliance issues are handled accurately. 
    1. Administrative relief: The day-to-day HR and administrative tasks (payroll, benefits, compliance, risk management) are managed by a professional entity, freeing you up to drive strategy, revenue, and team building. 

    Special note for the transportation industry 

    Many businesses in transportation must partner with a CPEO if they choose to outsource certain HR functions, specifically due to the liability implications tied to compliance rules. If your sector requires or strongly recommends partnering with a CPEO, understanding these benefits becomes even more crucial. 

    A CPEO You Can Count On

    At Group Management Services (GMS), we’ve taken the extra steps to become a certified PEO recognized by the IRS. GMS meets all IRS CPEO requirements so our clients can operate with confidence. What does that mean for you?

    Reduced risks: We assume the primary liability for federal employment taxes for our clients’ worksite employees.

    Time and cost savings: From payroll administration to benefits management and HR compliance, we handle the details, allowing you to focus on growing your business.

    Ongoing compliance expertise: We stay on top of IRS regulations and beyond, ensuring your organization meets updated standards.

    Contact us today to learn what a certified PEO is and how GMS can deliver peace of mind and improve your bottom line.