Introducing the Concept of Employee Leasing

A typical business must handle payroll, benefits, HR issues, and risk management. Those who are looking to save costs or prefer not to handle these functions are turning to employee leasing companies. What exactly does this mean?

“Workers who are officially employed by a professional employer organization, which is responsible for overseeing all HR-related functions, but who actually perform all work for your company.”

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In other words, a contractual arrangement in which the leasing company is the official employer. These leasing companies are also known as professional employer organization (PEO). All back office responsibilities are generally given to the PEO, while management control remains with the business owner.

The subscribing firm leases its employees back as employees of the leasing firm and generally pay more for their services than their salaries at the time of transfer. In this way, the payroll, associated expenses and taxes of the leased employees become the leasing firm’s liabilities.

Leasing companies do such things as reporting wages and taking care of employment taxes. The only thing you as a business have to worry about is paying an invoice, which in turn covers all payroll, taxes, benefits, and admin fees. You pay, the PEO does the rest.

The main advantage of PEOs is that these back office functions can often be put together, thus enjoying scalable benefits. Ultimately this can lead to large benefits of first time and of course money.

Before, this meant outsourcing back office departments. However, many services are now more specialized and in depth. For example, Staffer specifically leases hospitality and customer service employees. Even more specifically, functions such as scheduling, payrolling etc. are all options that may/or may not be chosen, thus being better able to cater to customer needs.

Join us next time, where we’ll list steps needed in order to choose a quality vendor.

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