A CPEO works very much like a PEO, but takes on some added responsibilities related to payroll administration and federal employment tax reporting and payments.

Being certified means that the PEO has applied to be certified with the IRS, has provided extensive information about its financial information, company viability, background checks on key employees, tax compliance history and other related information and has obtained at least a $1 million surety bond to guarantee the PEO’s ability to pay all federal employment tax liabilities to the IRS.

Though selecting the right vendor is an important decision, selecting the right PEO has serious financial and tax implications. Ultimately, certification assures that the trust you place in Emplicity is verified by the very agency that would otherwise come knocking at your door—the Internal Revenue Service.

Beginning or ending a PEO relationship mid-year can trigger a double tax payment for companies. With a CPEO, the taxes paid on the previous federal employer identification number (FEIN) will carry over. When clients begin or end a relationship with a CPEO, they are not required to restart federal payroll wage bases. Instead, the CPEO becomes a successor, preventing the client from having to pay these taxes twice.