Was reading a post the other day and can’t remember who wrote about using a temp service for their employees.
I’m thinking of doing the same and looking for input. I’m a small company, 2 to 3 guys, and would like to get away from some paperwork if I could.
Please help.
Thanks,
Adr
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instead of using a payroll service/leasing company you may want to cut down on paperwork by using a payroll service. the leasing firm will take a cut of your workers comp, and other benefits. I know they say that they are able to get a lower rate by using volume. I cry BS. Bigger usually means more accidents. Hence higher rates.
Anyway, best thing we did was to start using a payroll service when we started. They do tax filings, tax deposits. Any notice from the IRS goes right to them. They clear it up. No muss no fuss.
Call around. Find one you like. try em
I doubt if I would call a temp outfit and take whoever they send - that's probably as risky as hiring from the parking lot labor pool at the Home Depot. - lol
If you have a couple of guys you want to use but the work isn't regular, running them thru a temp agency might be the best plan. The agency can handle all the payroll stuff. You'll just need to know how much the agency is charging so you can pass the cost thru in your rates.
If you have enough full time work, a payroll service would probably be a better bet.
It would also be good to see if there is a difference in the Unemployment Insurance rates if you use an agency v.s. hiring direct. UI rates go up if you have a lot of layoffs. Working thru an agency allows you to hire for the job.
I used a temp agency for a couple of years, picking the employees, then having them sign up.
But the markup was high, so I set up my own payroll and bought my own W/C policy. The paperwork was a nightmare, especially since I'm a hands-on G/C and was doing all the paperwork in addition to pounding nails all day.
However, knowing that I was benefitting by much lower W/C rates on many of the skill sic codes (like residential concrete foundation work premiums are 1/3rd of the premiums for framing or roofing (we do all of those), I went back to the temp agency and negotiated a rate for my crew, requiring only that the description of their work for W/C purposes is itemized on their timecards.
The rate I am paying is competitive with the payroll service agencies I contacted.
What state are you in? Are you year round... or do you lay off over the winter?
I was a former President of an employee leasing firm (also called a Professional Employer Organization)... may be able to give you some insight... but the state rules vary widely. Getting better.. but still vary widely.
I was probably the one who you read posting about using a temp firm. That particular situation was for a fellow who wanted one guy for a shorter period of time. "Payrolling" works well in that circumstance. (Payrolling is where you have the employee and want the temp firm to hire that person.. then have that person do work for you)
In your circumstance... you have employees who will continue working at an indeterminate amount of time. For this... the outsourcing way to go would be a PEO (again, depending on your state rules). Temp firms and PEOs are not the same.. and pricing is very different.
adr.. it depends.. some areas and some leasing services have legitimate operations..
a lot are scams...
the owners of some of them collect all of the premiums from you , but don't pay them out.. or .. they mis-classify workers to pay lower premiums..
a worker gets hurt and the insurance company refuses the claim....
or.. they don't pay the IRS payroll taxes.. eventually it falls apart... and you may have a liability..
each state is different.. some state attorney generals have cleaned up the mess.. some haven't..
Rhode Island put two of the leasing companies out of business for the reasons listed above..
due diligence is in order
I use a temp agency as a payroll agent.
Mike you seem to be saying that if the temp business screws up I could be on the hook?
Can anybody explain the difference between a payroll agent and a temp supply busines?
I hire my own guys and send them to the agency for payrolling.
tmo...
think about it.. the leasing service:
they have to pay the same taxes as you, the same insurance premiums as you... the same hourly wages as you
so.. they charge you over and above your expense you would incur if they were your employees.. ok.. if the carpenter is being carried on their books as a carpenter.. and his WC premium reflects that.. then no problem
if he's being carried as a clerk.. and he gets injured while working as a carpenter.. then the ins. co. will not pay..
so the guy hires a personal injury lawyer and they come after everyone, you have to defend the suit.
maybe your GL covers you... maybe it doesn't.. but it will cost you..
in some of the more notorious cases.... the leasing company was collecting all of theses expenses from guys like you, giving the "worker" a weekly check with all the withholdings out.. and pocketing all of the withholdings and premiums
it cost the companies lots of money to get out from under those..
"payroll service", " employee leasing company", " payroll agent".. it all depends on your contract and the services you are signing up for..
just remember.. there is no free lunch.. can they really hire and lease back workers to you , cheaper than you can do it ? .. no way..
is it more convenient and can you fit the labor costs more closely to your cash flow ? probably..
but you have to make sure the company is legit and they are doing what the law requires them to do
one of the BEST things i ever did with our employees was hire a Payroll Service..Mike Smith Rhode Island : Design / Build / Repair / Restore
I accept that I am paying a premium on payroll but now I'm worried that my agent my leave me on the hook.
Whats the difference between a leasing service and a payroll service?
>>>>"Whats the difference between a leasing service and a payroll service?"A payroll service is merely outsourcing of the payroll function for YOUR employees. You are completely legitimate as far as the authorities go.I'll tell you that I followed the advice of many on this board (Mike Smith was definitely the most vocal proponent) and began using a payroll service. They all said it was the best thing that they had ever done.My service (Paychex, I would talk to your accountant/banker and see who they recommend) is pretty simple. I get called at 1000 every other Tuesday and give them the hours of the employees. Today (Wednesday) a courier will deliver the checks and filing information. The taxes are automatically withheld and deposited with the appropriate local/state/federal agencies. I will never be late on filing any taxes and don't even have to think about them.Our service costs about $55/pay period. For the time it saves, piece of mind with regard to the taxes, and professional appearing and concise statements that I get every period (with a quarterly summary) it's the way to go.
-Edited to add content-Jon Blakemore
Edited 3/30/2005 8:05 am ET by Jon Blakemore
Forgive me if this sounds stupid but, there isn't a Paychex office here. Can they help you if they don't have a local office?
My "local" office is in Richmond, which is about an hour away. I think your best bet is to contact your accountant and see what he recommends. Your bank might be a good source of info as well.I do know that Paychex has an online division. I have had zero experience with that so don't have anything knowledge to pass on either way.
Jon Blakemore
Is your service a PEO, a temp firm, or a payroll service?
There are distinct differences between all of the above.
A PEO is a co-employment relationship... with responsibilities clearly defined in contract and subject to certain regulations. They typically provide the employee benefits, the WC coverage (depending on state), administer the HR for the company, etc.
A temp firm is much more of a sole employer (the temp firm).. although some of the co-employment responsibilities still fall to the work-site. To the best of my knowledge... every state has licensing requirements for temp firms.
A payroll service simply produces the payroll and the tax filings. There is no change in the traditional employment status of the employees.
To further muddy the waters... some payroll firms also have ownership of PEO firms. ADP has ADP TotalSource. Paychex has Paychex Business Solutions. And so on, and so on.
Edited 3/30/2005 11:50 am ET by Rich from Columbus
Payroll services are subject to the same problems.A couple of years ago there was one in town that wrote the checks and did all of the tax desposites. Or so they claimed.It took about 3 years for the IRS to catch up with them and then another year or two with the IRS sending demand letters to the business, but addressed to their agent - the payroll service.So by the time that the IRS got to the employeers they owned 3-5 years of back taxes and withholdins.
It is always a good idea to utilize only payroll services who use EFTPS (Electronic Federal Tax Payment System). This way, the client can check on their payment status very easily.
It is never a good idea to have your mailing address for tax related documents to be changed to that of a payroll service. As you indicated... the problems can mount over time... and the ball is MUCH heavier after 2-3 years, than it is after only one payroll reporting period.
Mike,
I agree that there are some bad apples in the PEO biz. Just as there are bad apples in the construction biz.
However, it far from qualifies as "a lot are scams".
The PEO biz is one of the most active industries that I have ever seen in self-policing... and one of the few industries that are actually actively pursuing MORE govt regulation (unfortunately, it takes a major failure, many times, to get govt regulators and politicians off their keisters... and many times it becomes a knee-jerk reaction).
ESAC (Employer Services Accreditation Corp), the Certification Institute (verifies WC and tax compliance), and many other NAPEO (National Association of Professional Employer Organizations) have been put in place to accelerate self-regulation... prior to comprehensive reform and uniform regulation.
In the beginning stages of the industry... there were several scams that ended in major failures. Since then, things have changed DRASTICALLY. Many states have licensing laws... some are extremely strict... others not so strict. Most states have registration requirements, if not licenses. However... just as a license or registration does not assure a good contractor... neither does license or registration of PEOs.
Just as with hiring a contractor... one must perform due diligence with hiring a PEO. Due to many of the bonding and/or licensing requirements (depending on state)... it is far less likely to find a bad PEO than it is to find a bad contractor... but it does still happen.
FWIW, payroll services have larger issues in most states than PEOs do. If the payroll firm does not deposit the taxes... the employer IS DEFINITELY on the hook. With most states... the PEO is the statutory employer.. thus is the one on the hook for state and local taxes. The IRS (on a national level) has almost completed requirements for "safe-harbor" in the PEO biz... in fact... they may have already completed it (haven't followed it as closely since I left the business). ESAC certification provides a surety bond as additional assurance for PEO clients. The Certification Institute provides an avenue for clients to keep close tabs on their PEO (as long as the PEO is a member... which I encourage prospective clients to choose a PEO that does participate... and highly recommend any existing client ask that their PEO become a participating member, if they are not already)
If you have questions about the state of regulation in the PEO biz.. I would highly encourage anyone to speak with Milan Yeager at NAPEO in Washington DC (executive director). Milan is a no-nonsense guy that is fighting tooth and nail to get comprehensive regulation of the industry... and has been for many, many years.
rich....
i agree with what you said..
due diligence is always in order... and unsphisticated businessmen like me have to be especially wary..
remember "Z-Best Carpet Cleaning"... what was he.. 19 years old ?.. scammed all the major firms on Wall Street...
i do know this.. a lot of guys get in toruble with the irs with their payroll taxes.. and dig holes it takes years to get out of...
legitimate , regulated, Payroll services are a boon to the average small employer
here's mine...
http://www.advantagepayroll.com/locations/offices.aspMike Smith Rhode Island : Design / Build / Repair / Restore
On the advice here I have scheduled a meeting with a paychex rep on Tuesday.
Thanks again(I think)
Tim