All of my employees are remote W2 employees with health benefits, etc. Over time, employees have moved to different states and now I am paying having to pay unemployment and payroll taxes in multiple states. I use Quickbooks for payroll which automatically calculates and pays the taxes so that part is not difficult but it increases our accounting expenses having to deal with multiple states and I am wondering if there is a better way to pay people?
I do not want to pay them as contractors so that is not an option. I’ve looked at PEO’s in the past but they seem to be more expensive than just doing it the way we are already doing it.
Is there anything else out there I should be looking at to make payroll and taxes more efficient?
Disclaimer - I work for Justworks.
It likely depends on the remote states that your employees have moved to determine whether a PEO is right for you, or if you can save costs with a payroll-only provider. States like Texas and Florida tend to be pretty light on compliance, but others have a ton of payroll and employment laws to follow. Some companies get frequent state fines when doing it themselves, but some never do. That’s the risk.
The benefit of a PEO is that you have protection from employment compliance laws since we’d be taking on your compliance liabilities and handing the admin on your behalf. A payroll company would offer compliance support, but ultimately you are responsible if you ever get a fine.
Consolidating insurance, workers comp, and any ancillary benefits you offer usually provides a significant cost relief to make it less of an expense, or even a cost-neutral solution. Then you’ll spend less time on admin and have other resources to lean on for you and your employees in the form of HR consultants, additional benefits at no cost, etc. There are cheaper PEOs out there than Justworks, but you’ll want to see if they are a Certified PEO by the IRS, and check if they have other extra fees associated. Happy to chat over DM if you have other questions