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 Small business owner in California talking to a PEO about payroll

How Does a PEO Handle My Company's Payroll?

Your employees rely on accurate and timely payroll, and your business relies on the trust of those employees to function properly. If you’re choosing to handle payroll on your own, you may be setting yourself up for costly mistakes in the future.

PEOs like BBSI offer payroll services to small businesses like yours that offer to streamline and optimize the process, but what does that mean specifically?

Listen to the article: How Does a PEO Handle My Company's Payroll


What makes the process of PEO payroll worthwhile, especially in states with unique laws and regulations like California?

In this post, we’ll break down the details and give you tips on selecting the right PEO partner.

Handling Payroll on Your Own Might Cost You Time and Money

The larger your company grows, the higher the odds you’ll encounter payroll problems like:

Employee Misclassification

Companies that make use of contractors have specific requirements to follow when it comes to employee classification, and it can even be difficult to understand the difference between exempt and nonexempt employees. Failure to properly adhere to classification requirements can bring substantial fines and penalties.

Failure to Adhere to State-Specific Payroll Tax Requirements

Every state has its own set of rules for payroll taxes. Companies operating in multiple jurisdictions may have to follow different sets of local tax regulations, increasing the risk of fines and penalties for non-compliance.

Improper Handling of Garnishments

Child support and wage garnishment orders require compliance with specific legal processes. Mistakes in handling these orders can lead to wasted time, money, and legal complications.

How Does a PEO Handle Payroll in California?

California presents unique payroll challenges to business owners. This is due to the state’s complex and constantly evolving labor laws.

Why Payroll in California is So Complicated

Several areas of compliance are more stringent or complicated in California than in other states. A few examples include:

Overtime Rules: Most states calculate overtime based on a 40-hour week. In California, overtime is calculated daily based on an 8-hour day.

Paid Leave Benefits: In comparison with other states, California provides generous paid family leave benefits that require careful payroll deductions and administration by employers.

Paystub Requirements: California has detailed requirements for paystubs, including specific information that must be provided to employees.

How PEOs Simplify Payroll in California

Payroll in any state is subject to rules and regulations that can cost you critical resources. This is especially true in California, where strict labor laws further complicate the process of calculating overtime, pay stubs, and benefits.

PEOs simplify the payroll process by taking on tasks like:

  • W2 & 1099 Administration
  • ACH & EFT Processing
  • Wage Garnishments

A solid PEO payroll partner will have the experience and knowledge necessary to cut through the red tape and keep you focused on the task at hand: growing a successful business.

The Benefits of Leveraging a PEO for Payroll

A reliable PEO does more than just payroll. They make professional services like HR, benefits, business strategy, and workers’ compensation part of their repertoire to help businesses scale at their own pace.

When you choose the right PEO partner, you’ll gain access to:

Dedicated Expertise

Since services like HR, benefits, and payroll are the primary functions of a PEO, they have the time and knowledge necessary to avoid payroll pitfalls.

This expertise means you won’t just have someone to rely on when complications arise — you’ll have someone silently helping you steer clear of those complications in the first place.

Technological Resources

An experienced PEO will know the value of dedicated software that streamlines the payroll process end-to-end, minimizing the risk of timekeeping mistakes.

Access to advanced software means you won’t need to worry about the administrative workload of ensuring every employee is paid on time every pay period.

24/7 access to paystubs and compensation information will keep you organized and your employees happy.

Personalized Consultants

Every business has its own payroll challenges, so a one-size-fits-all solution can cause businesses in more complex industries to slip through the cracks and risk compliance failures.

A PEO with knowledge of your industry can offer custom-tailored solutions for things like managing employee classifications and accurate timekeeping.

Finding the Right PEO For Payroll Services

A PEO can save you time, money, and resources and help you avoid costly payroll errors that can damage employee relationships and severely hinder your business.

But how do you know you’re contacting the right PEO for help?

1. They Know Your Industry

Every industry is subject to unique laws, regulations, and employee expectations that your PEO should already know.

Look for a PEO with a proven track record in your industry to ensure you’re getting a partner you can trust.

2. They Have Their Own Software Solutions

Technology drives the modern world. It improves efficiency and saves time.

Despite its usefulness, investing in a new software solution costs time and resources that can be prohibitive, especially for small businesses.

Choose a PEO that’s already invested in their own software solutions. This will prove they’re dedicated to efficient and responsible payroll management.

3. They Handle All Aspects of Payroll

Your PEO shouldn’t treat payroll like a bi-weekly task. Instead, they should be fully immersed in all aspects of payroll management, including:

  • Industry best practices
  • Compliance education
  • Error resolution and employee trust
  • Tax document administration
  • ACH and EFT processing

Choose a PEO Payroll Partner with All the Tools: BBSI is Here to Help

Business owners who plan to scale their business are certain to run into complex payroll problems they may not know how to resolve.

Selecting the right PEO payroll partner means choosing one who will not only work through these mistakes when they arise, but actively help you avoid them with knowledgeable insights and personal dedication.

BBSI stands ready to be that partner for your business.

At BBSI, we’ve spent decades helping companies in all industries and all 50 states eliminate payroll problems through our tailored professional solutions.

Our wide range of services, custom technology solutions, industry expertise, and business experience make us uniquely qualified to partner with small businesses and help them on the path to growth.

Find your local BBSI representative today, and let us know what you need help with.

Disclaimer: The contents of this white-paper/blog have been prepared for educational and information purposes only. Reference to any specific product, service, or company does not constitute or imply its endorsement, recommendation, or favoring by BBSI. This white-paper/blog may include links to external websites which are owned and operated by third parties with no affiliation to BBSI. BBSI does not endorse the content or operators of any linked websites, and does not guarantee the accuracy of information on external websites, nor is it responsible for reliance on such information. The content of this white-paper/blog does not provide legal advice or legal opinions on any specific matters. Transmission of this information is not intended to create, and receipt does not constitute, a lawyer-client relationship between BBSI, the author(s), or the publishers and you. You should not act or refrain from acting on any legal matter based on the content without seeking professional counsel.

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