As a Professional Employer Organization (PEO), Abel HR takes its responsibility to its co-employees very seriously and has gone through the rigorous process to obtain certification from the IRS and become recognized as for fiduciary responsibility as a Certified Professional Employer Organization (CPEO).
What does this mean for you as a small business owner or human resources professional? It’s knowing the PEO has voluntarily undergone the scrutiny of the IRS and the federal government is endorsing the financial stability of the PEO.
When you work with a CPEO like ours, we conduct tax filings, payroll, withholdings and compliance filings. A CPEO is 100 percent held accountable for federal employment taxes, which protects the client. When a client contractually works with a CPEO, the client cannot be held liable for federal taxes and the IRS cannot go after the client for taxes owed. The tax liability lies squarely with Abel HR and if there ever is an issue, the responsibility falls on us to work with the IRS. We use our own Employer Identification Number (EIN) to pay federal taxes on behalf of our clients.
As an industry-leading best practice, Abel HR also has its books independently audited monthly, giving you extra assurances your taxes were paid.
Becoming a CPEO
CPEO certification is a rigorous process set forth by the IRS. Abel HR voluntarily submitted verification of tax compliance history, third-party CPA opinions, annual audits and independent surety bonding for federal tax liabilities.
A surety is the insurance company that backs the bond Abel HR is required to hold. The surety provides a line of credit in case the principal, in this case, Abel HR, fails to fulfill the task of paying the taxes due. Bonds for PEOs are set at 5 percent of the collective annual federal tax liabilities with a $50,000 minimum and $1 million maximum.
The CPEO certification process began in June 2017 as a result of the Small Business Efficiency Act (SBEA). This piece of legislation enables PEOs like Abel HR to secure certification from the IRS as an employer for the purposes of collecting employment taxes, conducting payroll and paying wages. This program includes bonding, annual audits, quarterly CPA attestations and an annual fee of up to $1,000.
- Payroll Tax Liability: CPEO clients are not liable for federal payroll taxes on wages Abel HR processes. Abel HR solely bears the responsibility.
- Wage Base Restart: When clients enter or exit a CPEO relationship they are not required to restart federal payroll wage bases as the CPEO becomes a successor This prevents double taxes for the customer.
- Confirmation of Tax Credits: Just because you want to work with Abel HR, doesn’t mean you need to sacrifice your business’ tax credits. Federal tax credit programs are not impacted when you work with a CPEO. In fact, the CPEO can apply for research and development payroll tax credits for its customers, if they are eligible. Talk about a time and paperwork saver for a small business.
CPEO certification is one way to ensure your business is working with one of the most ethical, financially stable PEOs in the country. Speak with one of our experts at 800-400-1968 to learn more or email firstname.lastname@example.org.