Hiring talent from a skilled pool of candidates can have its challenges, especially for a foreign company that is expanding to the United States. To attract prospective employees, a common topic is benefits. Employees in the US, especially key employees, will expect things like health insurance and retirement plans. Obtaining benefits can be challenging, not to mention all the other requirements to be compliant with local state and city payroll requirements. Below are two of the more common solutions for obtaining benefits and managing payroll and HR requirements in the US.
Many of our clients who are only going to hire 1-3 key staff in the US might be better suited for a PEO solution. While companies that might hire a part-time workforce, do not need benefits immediately, and/or will hire more than 4-5 US employees in the next 6-12 months may be able to make it work with other options.
What is a PEO?
A PEO is a professional employer organization that allows SMBs to operate under their umbrella of a larger employer. Being a larger employer, will allow a better selection of options to your employees that they could not obtain on their own. PEOs automate payroll, benefits, and compliance needs for SMBs. A PEO consolidates all your employment and HR needs with one company, instead of having a multi-layered technology stack and self managing payroll reporting and compliance.
Why do I need a PEO?
According to a recent report from the Bureau of Labor Statistics, employee benefits represent over 30 percent of employers’ total compensation costs. With PEO-sponsored benefit packages, you can provide your employees with a wider selection of benefits than your company could obtain on its own. This includes medical, dental, and vision coverage; also includes things like a 401(k), life insurance, and commuter benefits. If you are looking to hire competitively while saving money on a benefits package, a PEO is a smart option for your business.
PEOs also make managing your payroll much easier. Whether your employees are salaried, hourly, or you sometimes hire contractors, a PEO simplifies payroll in multiple ways. Payroll automation ensures that employees are paid the correct amount and on the correct payment schedule. In addition, a PEO will assist with payroll tax filings and ensure that you stay compliant with employment regulations and registrations in each state.
What PEO Should I Use?
For a complete solution that handles employee benefits, payroll, and HR tools, we recommend JustWorks. This PEO platform covers all the essentials and brings a refreshing level of simplicity to SMBs looking to hire top talent in a competitive marketplace.
If you are only hiring one employee for now, JustWorks may not be an option, and you may want to seek out another PEO provider or talk with HPC about alternative solutions.
What if I don’t need or want a PEO?
PEO solutions are not a necessity for US payroll, and if you don’t need benefits or are ready to hire a larger workforce here that will allow you to competitively shop group insurance policies then there are other options.
Xero is typically not the ideal option in the US for a new employer without a lot of US payroll experience, as it is mainly self-service and opens up a lot of risk. Whereas solutions like Gusto payroll can cover most of your needs with the advice and oversight from a partner like HPC, helping to cover your current and future needs. You can still obtain benefits through Gusto and easily manage things like paid time off, retirement, workers compensation and individual state requirements. However, Gusto will manage all the payroll withholdings and tax filings, which is well worth it given the complexity in the US.
Establishing Your First Hires and Benefits
Once you are ready to hire there are many considerations aside from benefits, and you will need a US company, EIN, and bank account established before you can setup any US payroll or benefits. However, once you have all of these things, and register with a payroll provider they will help you select and manage your benefits and get employees onboarded and enrolled.
For help hiring your first US employee(s), or choosing the right payroll and benefits solution please reach out to discuss your options with HPC.