In this day and age, getting 98% of people to agree on any one thing is nothing short of a miracle!
Once you start looking for the best PEO fit for your company, remember to consider your PEO as one of your business’ trusted advisors. As with the rest of your advisors, certifications are important and protect you legally and financially. Your lawyer has to pass the bar. Your accountant is a CPA. And your PEO should be a CPEO.
Only a select group of PEOs are Certified by the IRS.
I know what you’re thinking. How exactly does an IRS-Certification really benefit a business?
IRS Qualification Process. A CPEO has been thoroughly vetted by the IRS so you can be assured that they are a reputable, compliant, and stable Professional Employer Organization.
Sole Payroll Tax Liability. The CPEO (and not your company) is 100% liable for federal payroll taxes. A certification designation means that the IRS cannot look to the client for federal payroll taxes, but only to the CPEO. This is not true for a non-certified PEO, although that benefit is often implied in the sales process.
Bonded. CPEOs are required to have a bond of up to $1 million to cover federal taxes, just in case something goes wrong. Rest assured, a CPEO has you covered.
FICA and FUTA Wage Base Restart. Your business will not have a wage base restart on federal taxes even if you begin a relationship with a CPEO in the middle of the year. The CPEO is deemed a successor employer, and your company will have no wage base restart at the beginning of the relationship.
Federal Tax Credits. Your company may be entitled to federal tax credits, and a CPEO is required to give you information necessary to claim any applicable credits.
When you enter into a PEO agreement, you’re entering into a partnership of mutual trust. The strict vetting process and CPEO designation by the IRS not only adds another layer of protection for your business, but also highlights the PEO’s trustworthiness and reputation as an industry leader. Make sure your trusted advisors are certified. Make sure your PEO is a CPEO.
Lee Yarborough and her father, Braxton Cutchin, founded the company in 1996. She has served on the Board of Directors of NAPEO and currently serves as the Chair for the NAPEO Carolinas Leadership Council. In 2015, she was named a Fellow of the eleventh class of the Liberty Fellowship Program and a member of the Aspen Global Leadership Network. Lee also serves on the Executive Board of Public Education Partners and is the founder and director of Read Up Greenville, a young adult and middle grades book festival in downtown Greenville, SC.