Nonprofits, like traditional businesses, have their unique employment issues that need to be catered to. However, nonprofits do not typically have disposable income. Nonprofits, like their name suggests, are not designed to make money for owners or shareholders. All profit the organization makes is used to maintain operations. In fact, very few nonprofits have enough financial cushion to hire a Human Resources professional, let alone a whole staffed department.
This is where a Professional Employer Organization (PEO) can step in and help out. PEOs are sought after to eliminate many of the challenges that businesses face such as payroll, taxes, employee benefits, workers comp, human resources, and compliance just to name a few. These business solutions are especially beneficial to nonprofits who are strapped for resources and cash.
This means any oversight on any aspect of HR could mean diverting even more time and energy away from your mission. Conversely, nonprofits without proper HR departments may struggle to provide affordable benefits packages and deal with employee issues.
PEOs are an excellent solution to this problem. Using a PEO will eliminate the need for a Human Resources department. PEOs also assume the responsibility associated with managing legal and compliance challenges related to employees. Managing payroll, administering and filing taxes, providing employee benefits and healthcare, and compliance services are all examples of how a PEO can help your nonprofit. This allows leadership and employees to dedicate themselves to the mission of the nonprofit without being bogged down by back office tasks.
How does it work?
Since the PEO is responsible for your back office tasks, the nonprofit will be required to accept the PEO’s guidelines for policies and procedures. The nonprofit will also enter into a co-employment agree with the PEO. This means that the nonprofit will still have control over their employees from a day-to-day standpoint. However, the PEO will be responsible for paying employee wages and taxes through the PEO’s EIN. PEOs need to use their EIN because they can leverage the number of employees to get lower unemployment tax rates. Those savings are then passed on to their clients.
Aside from saving you money from your tax bill, PEOs can also offer additional benefits such as background screening, drug testing and employee onboarding. Some additional perks of using a PEO could be cheaper insurance and workers comp premiums, 401(K) offerings, and employee benefits. These benefits come at a reduced cost when partnering with a PEO and can help attract and keep great talent.
Nonprofits also have to comply with certain state and federal laws that are different than traditional businesses. Luckily, PEOs are experts in regulations across the federal, state, and local level. Leaning on your PEO for compliance will not only save time, but also provide a peace of mind.
For many nonprofits, partnering with a PEO can prove to be mutually beneficial. PEOs offer nonprofits countless benefits and free up valuable resources to accomplish the mission at hand.
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.