It’s no secret that business owners often wear many hats. But truthfully, they shouldn’t have to. When businesses have the right support, productivity increases, innovation triumphs, goals are met, and businesses often see an increase in revenue.
This is why outsourcing has become such a crucial aspect of business success. Many business owners can’t afford to hire full-time employees, but they still recognize the power of having support to meet ongoing business needs.
If you’re a business owner looking to maximize your success, read on to learn what employee leasing is and the benefits of an employee leasing company for your business.
What Is Employee Leasing?
Employee leasing refers to an arrangement between a business and a leasing company. The leasing company provides workers for clients on a project-specific or temporary basis. In this scenario, the employees work for your business, but they are paid a salary through the leasing company and the leasing company deals with all HR administrative tasks on your behalf.
It’s important to note that employment responsibilities are generally shared between the leasing company and the business owner. As the business owner, you will retain management control over work performed by the temporary employee(s). On the other side, the leasing company is responsible for reporting wages and employment taxes.
The business owner will write a check to the leasing company, which covers payroll for the temporary employee, along with taxes, benefits, and administrative fees.
Common Tasks Handled by Employee Leasing Companies
Many business owners favor employee leasing because it enables them to add employees to their team without including all of the administrative tasks that come with it. In fact, an employee leasing company will manage various important administrative tasks on the business’s behalf, such as:
- Compliance with state and federal regulations
- W-2 forms
- Claims processing
Difference Between a Leased Employee and Co-Employment
Employee leasing and co-employment are quite similar but have key differences that are important to distinguish.
Employee leasing is a temporary arrangement between a business and the leasing company. More often than not, businesses use employee leasing for project-specific situations, which enables them to quickly contract an employee to ensure they meet deadlines.
Co-employment, on the other hand, has a slightly different function. According to The National Association of Professional Organizations (NAPEO), co-employment refers to the contractual allocation and sharing of certain responsibilities between the PEO and the business. In the case of co-employment, the temporary employee is actually employed by both the PEO and the client.
One important distinction to make is that with co-employment, employees aren’t actually supplied. Employees are typically already working with the client or are future employees hired by the client. In a co-employment relationship, the PEO will have certain employer rights, responsibilities, risks, and some HR administrative tasks, such as:
- Sending wages and withholdings of the client’s employees
- Issuing Form W-2 under its EIN for compensation
- Reporting, collecting, depositing employment taxes on the client’s behalf with local, state, and federal authorities
When to Use an Employee Leasing Company
Employee leasing can add great value to help support business needs. Here are a few scenarios where you may want to invest in an employee leasing company:
- You have one or several upcoming projects where a temporary employee would be the most cost-effective solution
- You’re a startup company with little capital and are in the process of scaling your company
- You need employees but are having trouble finding qualified talent
- Your industry requires you to produce different products with a variety of expertise, such as construction and manufacturing, and you need to diversify your employee base
Benefits of Employee Leasing
Whether your business has seasonal demands, you lack resources, or you need temporary assistance for a project, employee leasing can be an excellent option. Here are five benefits of implementing employee leasing for your business.
Quickly Fill Open Positions
Employees are important to any business. Without qualified talent, business operations will grind to a halt. For this reason, business owners typically want to fill open positions as quickly as possible to maintain productivity in the workplace.
This is one of the benefits of investing in an employee leasing company. An employee leasing company will generally have a large network of available workers, which means that businesses can access qualified employees in a few days, and sometimes less.
Find Industry Experts for Projects
Some projects require a certain level of expertise. Unfortunately, even with an in-house HR department, it’s not always easy to find qualified talent with the skills and experience necessary to get the job done.
However, an employee leasing company can help you source the top employees with highly-specialized skills to meet your business needs.
Relieve Yourself From Administrative Burdens
Many business owners get overwhelmed with the growing responsibilities of the company. One task, in particular, that can feel like a burden is business administration.
If you would like to reduce your workload, hiring an employing leasing company can provide support by dealing with various aspects of recruitment on your behalf.
Potential to Retain Talent
Another benefit of using an employee leasing company is the ability to retain talent. While a leasing company will be providing you with a temporary employee, you will have the option to hire that employee full-time if they meet your expectations.
Save on Hiring Costs
The cost to hire can certainly add up. Businesses must think about job advertising costs, interviewing, background checks, and more. This is another benefit of relying on an employee leasing company.
When leasing, you cut out all of the additional expenses associated with hiring, which enables you to allocate money elsewhere.
Contact a Boston Employee Leasing Company Today
Are you interested in an employee leasing company for your business? Employee leasing offers invaluable support to meet your unique business needs.
At NetPEO, we’re here to provide high-level service to meet our client’s business needs. Contact us today to learn more about our employee leasing services.