Running a business is already a challenging endeavor. However, there are some aspects of running a business that are harder than others. After working with thousands of business owners we were able to compile a list of the biggest challenges facing a business owner.
Healthcare
Easily, one of the most difficult aspects of running a business is managing health care for you employees. As a business owner, your employee’s health is obviously a priority, however health care plans can be complex and expensive. Employee health care plans are often geared to large corporations leaving small and medium businesses slipping through the cracks.
Luckily a PEO can help you lower your health care costs as well as provide better coverage. PEOs can leverage their vast network of employees to purchase health care plans at much lower costs. These saving are then passed on to their clients.
Government Regulations
It seems with each new year the government insists on adding regulations, making it harder to run your business. On top of that, failure to follow these complex and often ill prepared regulations can result in hefty fines. The challenge is adapting to new rules and regulations, while coming up with a game plan to address them.
PEOs are well versed and are always kept to date with new and changing government regulations. A PEO will ensure that your business is compliant with and federal, state, or local regulations. PEOs can also help you come up with specific solutions to your business need or industry.
Federal Income Taxes
Doesn’t it feel like every year, Uncle Sam is trying to dig a little deeper into your pockets? Taxes vary from state to state and taxes can progress at different rates. Taxes can get incredibly tricky if you have some employees working across state lines. On top of that, one wrong tax mistake and the IRS could send you a bill for a lot of money.
Luckily, PEOs know tax law like the back of their hand. They guide their clients and help administer taxes to ensure there are no mistakes. PEOs will be sure to remind you of any pertinent deadlines or information regarding your tax situation.
The Economy
Truth be told, nobody knows what the economy is doing or where it’s going. Not even Wall Street traders, so called “masters of the universe,” can predict the growth of the economy. Take the beginning of 2020 for example. In 2020, the stock market was at an all time high, unemployment rates were the lowest they’ve been in a while, and the greater economy looked promising. Fast forward a couple months after the start of 2020, and the economy tanked, businesses shutdown and millions of people were left unemployed. The uncertainty of the economy cannot be overstated and learning this can keep you from taking unnecessary risks.
Like stated above, nobody knows what is going to happen to the direction of the economy for the foreseeable future. However, using a PEO can set your business up for success regardless of the economic conditions. That is because a PEO supports your back office needs, giving your business a higher chance of success when the economy is suffering. In fact, PEO clients fare better than those without one during trying economic times. For example, PEO clients were almost twice as likely to be approved for PPP loans during the coronavirus pandemic. PEOs might not be able to predict the economy, but they can steer your business in the right direction through choppy economic waters.
Tax Compliance
Taxes can be tricky. Figuring out tax write offs and keeping up with regulations are time consuming, and if you do not have a knack for bookkeeping, frustrating. For employers with workers across state lines, the employers need to be weary of each state having different laws and regulations. Failure to comply with state tax laws can result in a serious fine.
Luckily, a PEO can help with tax compliance. When you enter into an agreement with a PEO, they become responsible for filing and administering your business’s taxes. They also take the liability risk with the IRS when filing on behalf of their clients. This means that while using a PEO, you can take a seat back and trust that your taxes will be paid on time and correctly.
Cash Flow
Cash flow problems can be one of the hardest challenges to solve as a small business owner. Even if your business is growing, cash flow problems still rear their ugly head. In fact, according to a bank study, cash flow problems are responsible for 82% of small business failures making it the largest threat to business owners.
PEO clients experience a slightly different story. Because PEOs cover their client’s back office, clients are then able to focus more time on the aspects of their business that make money. Instead of spending hours a week making sure taxes line up, payroll went out and new employees are onboarded, you could spend time doing more jobs or making more products. This increased productivity from having your time freed up can help keep cash flow issues at bay.
Hiring New Employees
Around the country, many small to medium sized businesses face troubles when trying to hire new employees. The cost of hiring new talent is continuously increasing. Costs such as equipment, benefits, taxes, bonuses, and training time all must be accounted for even before a salary is agreed upon. Truth of the matter is, without employees, a business cannot run properly. And without great employees, a business will never be great.
PEOs are a great asset to have in your corner when looking to expand your team. PEOs can help organize background checks, drug tests and help with other aspects throughout the hiring process. Joining a PEO could also lead to higher quality and more cost-effective employee benefits. Increasing employee benefits can lead to lower turnover and higher employee morale. While using a PEO, you could also outsource some of your human resources practices to better manage your employees. A PEO partnership can lead to acquiring and keeping the best talent.
Partnering with a PEO like CornerstonePEO may be in your best interest. CornerstonePEO covers everything from HR and employee benefits to payroll and workers comp. Our industry leading PEO services offer innovative, cost effective, easy to understand business solutions for companies of any size and industry. Contact us to learn more.
