The Best IRS & ESAC-Approved PEO Companies: Top Picks
Updated: October 9th, 2023
As a business owner, you know how important it is to have your finances in order. One strategy for doing so is to outsource HR and payroll processing to a Professional Employer Organization (PEO). If you’re searching for the right PEO for your business, you may have come across the Internal Revenue Service (IRS) and the Employer Service Assurance Corporation (ESAC) certifications. This article will go over why they may be important for your business, and we'll focus on the best IRS and ESAC-certified PEOs.
Defining PEO & Its Significance for Businesses
PEOs are great for businesses. They handle HR tasks like payroll and benefits, freeing up businesses to focus on their main work. They’re like HR experts that small businesses can partner with. They also use their size to provide better benefits at lower costs for both employers and employees. It might be a big decision to make, but it is also a solution that will lead to significant growth and success.
What Are the Benefits of Using an IRS & ESAC-Approved PEO Company?
When selecting a PEO for your business, it's essential to grasp the significance of both the IRS certification and ESAC approvals. IRS-approved PEOs (CPEOs) guarantee that the provider complies with specific tax and regulatory standards, offering businesses assurance in their HR outsourcing.
On the other hand, ESAC approval signifies a PEO's financial stability and commitment to industry best practices. These approvals instill credibility and trust in a PEO firm. By successfully navigating rigorous evaluations and meeting high benchmarks, approved PEOs provide businesses with the confidence they seek in HR management.
PEO companies seeking IRS approval undergo thorough audits and examinations to ensure adherence to tax laws and regulations. The IRS evaluation process is key to finding PEOs that the government recognizes as responsible employers. This approval protects businesses from possible tax liabilities, which makes them even more confident in their decision to outsource their HR. This is especially significant because their employees will have to handle important tasks such as payroll, hiring, tax filing, and so on.
CPEOs show that they can be trusted as HR service providers, which is very important for businesses looking for partners who will be committed to following the rules and managing payroll taxes efficiently.
To obtain ESAC accreditation, PEOs have to follow more than 40 best practices in the industry. This accreditation aims to hold PEOs responsible for their financial stability, ethical business practices, and adherence to regulatory requirements.
The agency focuses on federal and state laws when assessing a PEO and makes sure only the best are approved. Once approved, ESAC will provide surety bonds to protect the payment of things like wages, payroll taxes, employee benefits, and employer insurance premiums for employers.
ESAC regularly inspects PEOs to ensure they abide by the rules to maintain this license. This includes quarterly audits for providers not showing signs of losing their accreditation. If the PEO provider exhibits any signs of violating the rules, ESAC will conduct these checks once a month until the PEO can demonstrate that it is no longer in danger of losing its status as a top-tier provider.
It's important to keep in mind that both of these certifications are voluntary applications from the providers, so businesses that don't apply can still function properly without receiving the certifications.
Top IRS & ESAC-Approved PEO Companies
When it comes to the best PEO companies that are both IRS and ESAC-approved, you have a few options.
- ADP Totalsource: They have been in the business for over 60 years, offering cloud-based solutions for employees in the areas of HR administration, talent management, employee benefits, payroll, and regulatory compliance. They offer four payroll options that serve all business sizes, with features that range from basic payroll to a premium suite of tools
- Paychex: Paychex is a leading company that offers its HR services through a blend of human employees and a platform. They have been in the business for over 30 years and work with startups, small businesses, or medium-sized companies
- TriNet: They provide extensive services like payroll, talent acquisition, risk mitigation, and HR support. They provide their services through a cloud-based platform, which means everyone from the client company can view the data and update information using one login
- Insperity: They offer a wide range of HR and business solutions, including payroll, employee benefits administration, HR administration, worker's compensation, and employment law
While these three PEOs hold IRS and ESAC approvals, it's worth noting that there are other options like Rippling and Papaya, which may lack these specific accreditations but uphold rigorous internal ethical standards to provide high-quality services. Rippling is an excellent PEO system that is great for both small and medium-sized businesses. The service is also great for growing businesses because of its customizable solutions.
Selecting an IRS and ESAC-approved PEO can significantly enhance your business's financial stability, compliance, and overall success. These accredited PEOs have undergone stringent evaluations and adhere to industry best practices, ensuring that your HR outsourcing choice is a trustworthy and reliable partner in managing your workforce-related tasks.
Remember that these two accreditations are insufficient to base a decision on. Carefully look into the company you are thinking about hiring and follow our tips and tricks when choosing a PEO to find the right one for you.
We have fully reviewed all the PEO companies on this list, so we suggest that you take the time to read it before making any choices. After comparing the prices and features of different service providers, you can decide what suits you and your business.