More facts regarding PEOs: Taxes and Employee Incentive Programs

PEOs operate in all 50 states. Many states provide some form of specific licensing, registration or regulation for PEOs. These states statutorily recognize PEOs as the employer or co-employer of worksite employees for many purposes, including workers' compensation and state unemployment insurance taxes. The IRS has accepted the right of a PEO to withhold and remit federal income and unemployment taxes for worksite employees.

As the employer for employment tax and employee benefits, PEOs assume responsibility and liability for payment of state unemployment taxes, and most states recognize the PEO as the responsible entity. In those states that require the PEO to report unemployment tax liability under its clients' account numbers, the PEO or HR outsourcing company can still manage this responsibility. The employee leasing company assumes responsibility and liability for payment of wages and compliance with the rules and regulations governing the reporting and payment of federal and state taxes on wages paid to employees.

The right PEO can also help set up an employee incentive program, which reinforces good, ongoing work ethics. Choose a competent PEO from our directory of professional employer organizations today, and experience the difference it will make for your business, and overall bottom line.