Here is an article from Inc. Magazine from last week. Let’s hope that Obama can get somewhere with this as legitimate companies get undersold on their services every day by what I call “pirate” companies that don’t pay taxes, don’t have workers comp, and use poor labor practices in order to win business.
There are various HR outsourcing models to choose. All have their benefits and detractors. One of the most obvious detraction for PEO (professional employer organization) is the fact that under the “co-employment” arrangement that a client agrees, all tax reporting is done under the PEO’s tax identification number. Thus, an entity, such as a not-for-profit, that enjoys certain tax deferrals, will be “taxed” by the PEO as the PEO is responsible for paying all taxes.
Be sure that the benefits and cost savings are worth paying these taxes. Sometimes the savings in workers compensation insurance and benefits cost outweigh the loss of these tax breaks, but sometimes not.