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  • Managing the operations of a small business is costly and requires time away from more valuable projects. That’s why many small and mid-size businesses outsource human resources, payroll, employee benefits, and risk management services. A PEO (Professional Employer Organization) can help take these responsibilities off the plate of business owners, so they can focus on the growth and success of their business.

    We’ve put together a guide to understand what PEO services entail and how to choose the right PEO for your business.

    PEO services help small and mid-size businesses with employee management.

    What is a PEO?

    A PEO provides comprehensive business solutions and services. Through the co-employment model, PEOs work with small and mid-size businesses to:

    • Manage payroll and tax administration
    • Manage human resources and risk management functions
    • Provide employee benefits
    • Stay compliant

    By providing these services, PEOs help make the companies they serve a better place to work and conduct business. This typically translates into faster growth, higher retention rates, and increased success for businesses. The National Association of Professional Employer Organizations (NAPEO) found that businesses working with a PEO:

    • Grow 7 to 9 percent faster
    • Have 10 to 14 percent lower employee turnover
    • Are 50 percent less likely to go out of business

    PEOs help businesses grow by allowing them to spend more time improving productivity and profitability while focusing on their core mission. Additionally, employees benefit by gaining access to big-business employee benefits such as 401(k) plans, wellness programs, and health, dental, life and other insurance offerings. All of this contributes to the success of a company.

    How to Choose a PEO

    There are more than 900 PEOs in the U.S., according to NAPEO. With so many options, it can be hard to know which one to choose. Follow these tips to help you to choose the right PEO for your business.

    Assess Your Business Needs

    Before talking to a PEO, you should take stock of your business needs. What current challenges does your business face? Do you anticipate any changes to your company that could impact the services you need? Look at facets of your business, such as:

    • Payroll: Between managing payroll and filing taxes, small and mid-sized companies spend an average of $2,000 per employee each year to handle payroll and many incur IRS penalties each year due to compliance issues. Outsourcing payroll services to a PEO can save you time and money by providing you with a simplified, online payroll system.
    • Human Resources: From recruiting and retaining employees to tracking vacation time, managing your company’s HR responsibilities takes a lot of time. Outsourcing these HR functions to a PEO can help you save time and money, while growing your business.
    • Risk Management: Managing your company’s risk on your own can be time-consuming and costly. Instead, you can build toward a more secure future by outsourcing to experts at a PEO. PEOs can help you qualify for workers’ compensation discounts, keep unemployment tax rates down, and create a safer environment for your employees.

    Identifying your needs within each of these categories will help you better determine how your business will use a PEO and set the stage for choosing a qualified partner.

    Build Your Benefits Package

    Employee benefits will make your business a great place to work and help retain talent. While you’ll be hard pressed to find a PEO that doesn’t offer access to health insurance, the providers they work with and the amount of coverage their plans provide will vary. In addition to assessing your business needs, you’ll need a good sense of what types of health coverage your current and future employees will require and what you’re willing to spend on it.

    When you work with a PEO, instead of directly with insurance companies, you’ll be able to leverage buying power through mass policies, which lets you take advantage of purchasing multiple policies at typically lower premiums.

    Speaking of multiple policies, you’ll also want to consider other benefits like dental, vision, and life insurance as well as 401(k) retirement savings programs to make your business more attractive to quality candidates. Additionally, wellness programs can help manage your premiums, while keeping your business running like a well-oiled machine. Whichever benefits are most appealing for your business, you’ll want to do your research to make sure you find a PEO that has everything you require.

    Perform a PEO background check

    When vetting PEOs, it’s important to look at their history, experience, and qualifications. Ask questions, such as:

    • How many companies do they partner with?
    • Do they have experience working in your industry?
    • How many employees do they represent?
    • What is their client retention rate?

    And don’t forget to look at reviews from places like Google and Facebook. These are all telling signs of whether a PEO will be able to properly handle your business needs.

    Additionally, accreditations from organizations like the Better Business Bureau (BBB) and certifications, such as the Certification Program for Professional Employer Organizations (CPEOs) from the IRS, help demonstrate trustworthiness and reliability in a PEO. CPEO certification affects the employment tax liabilities of both the CPEO and its customers. To become and remain certified under the CPEO program, CPEOs must meet tax status, background, experience, business location, financial reporting, bonding, and other requirements. With only 37 CPEOs in the country, small businesses know they are working with a trusted partner.

    Evaluate a PEO’s Technology

    The purpose of PEO is to make your life easier. If the technology platform that a PEO offers isn’t simple to use, then the PEO is going to be more of a burden than an asset to your company. Web-based payroll portals benefit employers by compiling everything they need to manage their back office in one place. They also help employees get paid on time, track time, and access W-2’s and paystubs.

    Your PEO’s online payroll system should help employers:

    • Manage and access payroll information
    • Complete payroll in minutes, not hours
    • Easily keep track of deductions
    • Simplify workers’ compensation calculations and payments
    • Generate on-demand payroll reports

    These payroll functions streamline the process for employers and keep employees satisfied.

    Beyond payroll, any other administrative functions a PEO can digitize is only to your advantage. Your PEO should offer online data collection services for:

    • Employee reviews
    • Timekeeping and PTO requests
    • Health insurance and employee benefits
    • Company communication
    • Employee handbooks

    Being able to store these types of files in an online portal makes it easier for you to access, edit, and track.

    Focus on Your Business

    The point of working with a PEO is to ease your workload. A PEO that you have to manage is only going to add to your stress and laundry list of tasks and responsibilities. Knowing your PEO is taking care of your more administrative needs while you focus on the core of your business is comforting to business owners.

    Your PEO should provide you with designated HR, payroll, and benefits specialists to meet all of your needs. Additionally, your PEO should have a comprehensive risk management team, from  safety specialists that keep your workplace and employees safe, to unemployment and workers’ compensation experts to investigate and help process claims.

    By having a PEO handle the HR, payroll, benefits, and risk management side of your business, you’ll be able to focus on what really matters: building your business.

    Work With a PEO

    When you work with a PEO, you need to make sure all your needs will be met. Group Management Services offers payroll, human resources, employee benefits, and risk management services to help your business succeed. With our proven history, easy-to-use online payroll portal, and dedicated team of experts, GMS is proud to take on your administrative burdens. When you work with us, you can put your focus back on client relationships, building an effective team, and growing your profits, while we help you reduce costs, limit risk, and save time and money.

    Ready to work with a best-in class PEO? Contact GMS today to talk with one of our experts to see how we can make your business simpler, safer, and stronger.

  • Who doesn’t love payday? For many employees, payday makes them feel better than Christmas. As a small business owner, you have the freedom to decide how to handle payroll at your organization. Talk about a huge responsibility. It’s important to get it right, as payroll done wrong can cost a small business owner time and money. 

    There are a few different methods for distributing employee pay, but savvy business owners find that electronic payroll methods like direct deposit and payroll cards streamline the process and keep employees satisfied. We explored the different types of payment methods to help you determine the best payroll solution for your business.

     Small business owner determining employee pay.

    Direct Deposit

    Direct deposit lets you put your employees’ wages directly into their checking or savings account. Because everything is handled digitally, employees don’t need to be present to receive their pay. The convenience of direct deposit for both employers and employees has made it the most common payment method in the U.S., with 82 percent of employees receiving their pay this way, according to a survey by the National Automated Clearing House Association (NACHA). 

    Direct deposit can help save time since you don’t have to fill out and distribute checks each pay period. Online payroll software can further help streamline this process and save money. With software, payroll simply needs to be reviewed before submitting it to be deposited in your employees’ bank accounts. Without software, small business owners are responsible for paying fees for setup and for every transaction.

    For direct deposit, you’ll need to gather your employees’ banking information at the time of hire. Of course, it only works if employees have bank accounts. According to the Federal Deposit Insurance Corporation (FDIC), nearly 20 percent of American households are “underbanked,” meaning they either don’t have or actively use a bank account. If you choose direct deposit as your primary payment method, you’ll need to provide an alternative option for those who don’t bank.

    Payroll Card

    Payroll cards are another form of electronic payment that lets you automatically load an employee’s wages directly onto a prepaid card at each pay period. Employees can then either use the card directly to make purchases or withdraw cash at ATMs.

    With payroll cards, employees don’t need to have a banking account, making it a viable alternative to direct deposit. It also helps save businesses time and money compared to writing or printing paychecks. The benefits for both employers and employees are why payroll cards have become a growing trend, with the use of payroll cards expected to increase by about 43 percent by 2022, according to a study by Aite Group.

    Other Types of Payment Methods

    Paychecks and cash are two outdated forms of payment methods that simply aren’t worth the hassle or added costs. For employers, writing or printing paychecks can be an extremely time-consuming task, especially depending on the frequency of your payroll. 

    Additionally, you’ll have to factor in the cost of purchasing blank checks, and/or printing supplies like check stock, ink, and a printer that has the capability to print with magnetic ink to read, process, and print bank account and routing numbers on the checks.  Switching to paperless can cut these costs. A report in Business News Daily states that “businesses save between $2.87 and $3.15 per pay run by paying employees electronically, such as via direct deposit, instead of via paper check.” The report also points out that online pay stubs save an additional $1.20.

    The amount of recordkeeping that comes with paying in cash can also be a nightmare for small businesses. Cash payments could make the IRS suspicious that you aren’t taking out the correct tax amounts, making you susceptible to an audit. Even if you are in compliance, IRS audits cost significant time and money.

    For both methods, employees need to be present in order to receive pay, which could be a problem if employees are out sick or on vacation. According to CareerBuilder, nearly 80 percent of Americans live paycheck to paycheck, so a delay in pay could really hurt your employees financially.

    Save Time Through Payroll Services

    While we’re thankful electronic payment methods have replaced checks and cash, managing payroll and tax filings can still be a time-consuming and challenging task for small business owners. 

    Need assistance? Outsourcing payroll administration to a professional employer organization (PEO) like Group Management Services (GMS) can help save you time and give you peace of mind. From electronic payroll processing to software to taxes, GMS takes an active approach managing payroll, so you can spend the extra, time, money, and energy growing your business. In addition to payroll services, GMS offers a full suite of HR services that compliment payroll administration, including human resources, risk management, employee benefits, and more.

    Contact GMS today to see how we can help manage payroll at your organization.

  • Payroll management is no simple task. Regardless of whether your workforce is 50 strong or you can count the number of employees on two hands, there are lots of employees and documents to keep track of and failure to do so could result in serious penalties and fines. To help, we’ve put together a guide for better managing payroll records.

    Payroll records. 

    What Payroll Records to Keep and For How Long

    Payroll records are documents and items related to paying your employees. Similar to how a candidate’s job applications and interview records need to be kept for one year, the U.S. Department of Labor (DOL) Wage and Hour Division and Internal Revenue Service (IRS) require employers to keep payroll documents for a set amount of time. Here are the payroll records you need to keep in your files:

    Hiring documents

    Hiring documentation like an offer letter include DOL-required employee data, such as their residential address, job title, and pay rate.

    Keep for three years.

    I-9 documents

    These include information about an employee’s eligibility to work in the U.S. and DOL-required information like the employee’s full name and Social Security number.

    Keep for three years.

    Time cards

    Time cards show total hours worked, including unpaid lunch breaks and overtime pay.

    Keep for three years.

    Paystubs

    These will show payment dates and the total wages each period. Paystubs will also include any additions (like reimbursement) or deductions (like taxes and benefits) to wages.

    Keep for four years.

    Employee handbook

    Every employee should have signed your employee handbook. Employee handbooks provide information on how your employees are paid (hourly or salary) and how often you pay employees (weekly, biweekly, monthly). It also describes information regarding paid holidays, termination, and severance.

    Keep for three years.

    Compensation philosophy

    A compensation philosophy shows how you determine employee pay grades. You’ll also need to show rationale for pay increases or merit increases, as required by the Equal Employment Opportunity Commission (EEOC).

    Keep for two years.

    Tax forms

    The IRS requires employee and employer tax documents, including W-4s (employees’ withholding allowance certificates) and W-2s or W-3s (employee’s wage and tax statements). 

    You’ll also need to keep payroll tax payments, which can be found on Forms 941 (employer’s quarterly tax form, which also includes information on tipped wages) and 940 (employer’s annual federal unemployment tax return).

    Keep for four years.

    Retirement income

    Retirement income statements show 401k or profit-sharing plan details as required by the Employee Retirement Income Security Act (ERISA). You’ll also need to keep documents outlining enrollment, payment, and payroll deduction.

    Keep for six years.

    Leave documentation

    The Family Medical Leave Act (FMLA) requires payroll records regarding your leave policy, requests for leave, leave balances, and leave payments. This information is typically found in your employee handbook or on employee paystubs.

    Keep for three years.

    Termination information

    A termination letter outlines an employee’s end date and any final payments, such as unused paid time off or severance.

    Keep for three years.

    Keep in mind that anytime you have a dispute relating to payment or employment with an employee, it’s best practice to keep all payroll records until the dispute has been resolved.

    State-Specific Payroll Records Retention

    Most states abide by the payroll records retention guidelines provided by the U.S. Department of Labor and IRS, as detailed above. However, a few states have further legislation that affects what payroll records to keep and for how long. These include the following exceptions:

    • New York requires payroll records to be kept for six years.
    • California requires that all payroll records be retained for six years.
    • Illinois requires employers to keep all payroll records for five years.
    • Washington has more specific requirements of what payroll records to retain.

    Destroying Payroll Records

    Keep in mind that holding onto payroll records for longer than required can put business owners at risk. Financial and personal information related to payroll, such as bank account information, credit reports, and photocopies of social security cards, should be destroyed after the retention time frame to prevent confidential data from being misused. In case any questions about destroyed documents arise, you’ll also want to keep track of which payroll records you’ve destroyed and when.

    How to Store Payroll Records

    As you can see, there are lots of payroll records to manage. Business owners will need a good filing system to keep track of these documents. 

    Think twice before storing paper records in filing cabinets or boxes. Often, these records are forgotten about and kept for longer than needed. It’s also time-consuming to manually file each document and can be even more tiresome should you need to refer back to certain records. Security can also be an issue, as these filing systems are often easily accessible.

    Rather, savvy business owners have found that it’s much more efficient to digitally store these important documents in a payroll management system. This ensures that records are securely stored and can be readily available from anywhere there’s an internet connection. Additional online payroll software benefits include:

    • Payroll processing. Ensure employees are paid on time every pay period and electronically store information regarding paystubs, payroll deductions and time tracking.
    • Payroll tax. Streamline filing and ongoing maintenance of tax records.
    • Employee self-service. Give employees 24/7 access to their payroll and tax information.

    Outsource Payroll Records Management

    When it comes to payroll records, there’s a lot of information to process—mentally and literally. Outsourcing payroll records management through a professional employer organization (PEO) like Group Management Services can help business owners save time and worry. We take on the burden of payroll records management, so you can put your focus back on client relationships, building and effective team, and growing your profits. In addition, GMS provides human resources, risk management, employee benefits services to help make your business simpler, safer, and stronger.

    Stop wasting time on payroll records management. Contact us today to talk to one of our experts about our payroll services.

  • Determining pay frequency can be challenging for business owners. While most employees prefer to be paid more often, a higher pay frequency can cost employers. Not to mention, there are federal and state laws that set standards for how employees are paid. That’s why exploring the different pay period options and federal and state payday laws is critical to help you choose the right pay frequency for your business and employees.

     Pay day.

    Pay Periods

    A pay period is a recurring length of time that determines how often employees are paid. Depending on your state, there are several to choose from, and each has its pros and cons (but we’ll get to that later). The typical options for paying employees are:

    • Weekly: This is usually on the same day of the week, like Friday, for the previous week’s work. Employees are paid 52 paychecks a year.
    • Biweekly: Employees are paid every other week, either for the previous two weeks or the two weeks before that. This pay period results in 26 paychecks a year.
    • Semimonthly: Workers are paid twice a month, usually on the first and 15th each month, receiving 24 paychecks a year.
    • Monthly: This is typically either on the last day of the month or the first day of the following month. Employees receive 12 paychecks a year.

     

    Federal Pay Frequency Laws

    Federal law does not set requirements for how often you have to pay employees—that’s left up to the states. However, federal laws do say that employers must keep a reliable and consistent pay frequency. This means that, for example, you can’t pay employees weekly one month and then biweekly the next.

    Under certain circumstances, you may be allowed to change your pay frequency. In order to do, so the following must apply:

    • You have a legitimate business reason.
    • The change is permanent.
    • You are not avoiding overtime or minimum wages.
    • You don’t unreasonably delay payment.

     

    State Pay Frequency Laws

    Almost every state has pay frequency laws indicating how often you should pay employees. Many states require a monthly, semimonthly, biweekly, or weekly payroll as the minimum frequency for paying employees. Keep in mind, you can always pay employees more often than the state requires.

    For example, Ohio requires a semimonthly payroll, but that is not the only pay frequency you can choose in that state. You can also pay employees biweekly or weekly, as long as you at least pay employees semimonthly. Or, in New Jersey, you can pay executive and supervisory employees at least once a month but must pay all other employees semimonthly at minimum. Find your state in the map below to see what the minimum pay frequency is for your business.

     

     

    Choosing a Pay Frequency

    After looking at your state’s pay frequency laws, you’ll have to determine how often to pay employees. While employees typically prefer to be paid more frequently, you’ll also have to consider factors that affect your business.

    Payment methods

    Depending on the way your employees are paid, certain payment methods are more of a hassle than they’re worth. For example, if you’re still using outdated methods like checks or cash to pay employees, then upping your pay frequency means spending more money on printing supplies and more time on bookkeeping. Even with direct deposit, higher pay frequency can mean more transaction fees if you’re not utilizing online payroll software.

    Employee benefits

    You’ll also want to factor in benefits. Employee benefits like health insurance typically run on a monthly basis, so paying employees monthly or semimonthly makes calculating voluntary paycheck deductions easier than if you were to pay on a biweekly or weekly schedule.

    Overtime

    While overtime isn’t a factor for salaried employees, it can be difficult to track for hourly workers if they’re paid on a semimonthly or monthly basis when the pay date falls in the middle of the week. For example, if employees are paid on a Wednesday, it can be difficult to calculate overtime for that week because that week’s pay is split into two different pay periods.

    Business owners typically find it’s best to pay different employees at different times. Many choose to pay salaried employees on a semimonthly or monthly basis, and weekly or biweekly for hourly workers.

     

    Payroll Services

    For small business owners, managing payroll can be one of the most time-consuming and challenging tasks there is. Need assistance? Outsourcing payroll administration to a professional employer organization (PEO) like Group Management Services (GMS) can ensure your employees are paid on time, every time. From electronic payroll processing to software to taxes, GMS takes an active approach managing payroll, so you can spend the extra, time, money, and energy growing your business. In addition to payroll services, GMS offers a full suite of HR services that compliment payroll administration, including human resources, risk management, employee benefits, and more.

    Contact GMS today to see how we can help manage payroll at your organization.