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Worker Outsourcing (Employee Leasing)
In addition to outsourcing specialized services
(such as accounting, legal, payroll,
and
employee benefits), you may find
it worthwhile
to outsource all, or most, of
your other
staff. Under this arrangement,
the people
that work on your site are actually
employees
of the outsourcing firm, which
handles their
paychecks and benefits. You,
in turn, pay
the outsourcing firm a fee that
covers:
- actual pay and benefits for the employees.
- the employer's share of Social Security,
Medicare and other payroll taxes.
- administrative overhead for managing the
employees' pay and benefits, plus reporting
that must be made to various governmental
bodies.
- a profit margin for the outsourcing company
The chief motivation for the
development
of such arrangements is the onerous
regulations
and reporting requirements that
governments
impose on small businesses. To
evaluate whether
such an arrangement is appropriate
for your
business, consider:
- the relative cost, in time and money, of
having the employees on your own payroll
versus on that of the outsourcing firm.
- the added flexibility you do (or do not)
get with respect to hiring and layoffs.
- your ability to choose the employees you
want.
- your ability to remove employees who prove
to be unsatisfactory.
Before entering into any such
outsourcing
arrangement, confer with your
legal and tax
advisers. In some circumstances,
government
agencies may treat such employees
as your
own, rather than employees of
the outsourcing
firm. This is especially likely
if they are
under a long-term outsourcing
agreement.
In that case, you may lose many
of the benefits
of outsourcing, and actually
incur extra
or unexpected costs and aggravation. |
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