1. Why would a business owner want to use a PEO?
2. In a PEO arrangement, does the business owner lose control of his or her business?
3. What responsibilities are typically assumed by the PEO?

Why would a business owner want to use a PEO?
All business owners want to focus their time and energy on the "business of their business" and not on the "business of employment." Most business owners don't have the necessary human resource training, payroll and accounting skills, knowledge of regulatory compliance, or background in risk management, insurance and employee benefit programs to meet the demands of being a good employer.

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In a PEO arrangement, does the business owner lose control of his or her business?
Absolutely not. As co-employers, the PEO and client/business owner become partners in the employment of their workers. The client retains ownership of the company and manages the day to day activities of the employees. As co-employers, the PEO and client contractually share or assume employer responsibilities and liabilities.

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What responsibilities are typically assumed by the PEO?
PEOs assume responsibility and liability for payment of wages and compliance with all rules and regulations governing the reporting and payment of federal and state taxes on wages paid to its employees. The Internal Revenue Service recognizes the PEO as the employer for federal income and unemployment taxes, and case law affirms the principle that the PEO is responsible for payroll taxes.

As the employer for employment tax and employee benefits, PEOs assume responsibility and liability for payment of sate unemployment taxes. Most states recognize the PEOP as the employer for UI purposes. Many states also recognize the PEO as the employer of worksite employees for purposes of providing workers compensation coverage.

Additionally, PEOs provide worksite employees with coverage under the entries spectrum of employment laws and regulations, including federal, state, and local discrimination laws, Title VII of the 1964 Civil Rights Act, Age Discrimination in Employment Act, ADA, FMLA, HIPAA, Equal Pay Act, and COBRA. In some cases, these laws would not apply to workers at small businesses without the PEO relationship, since many statues have exemptions based upon the number of workers in a work force. Once included in the PEOs workforce, the workers are protected by these laws.

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