By: Patty Hilger

  • A Certified PEO (CPEO) is a Professional Employer Organization that has met the rigorous background, financial, and reporting requirements set by the IRS.
  • Certified PEOs take on additional responsibilities with regard to payroll administration and federal employment tax reporting and payments of their clients.
  • GenesisHR is proud to be among the very first group of CPEOs designated in the United States.
  • This article is for small business owners and HR managers of midsize companies who are looking at the differences between certified and non-certified PEOs and trying to decide which is a better fit for their organization.

You may be familiar with the idea of a Professional Employer Organization, also known as a PEO, but have you heard of a CPEO? (Just when you thought you had it all figured out, they went and added a new letter to it!) This new acronym stands for certified professional employer organization. So what does the CPEO designation mean, and why should your small- to midsize-business care? Take a look and find out.

What is a certified professional employer organization (CPEO)?

First, let’s take a look at the IRS definition of a CPEO:

The IRS established a voluntary certification program for professional employer organizations (PEOs). These organizations typically handle various payroll administration and tax reporting responsibilities for their business clients.

Certification affects the employment tax liabilities of both the CPEO and its clients. A CPEO is generally treated as the employer of any individual performing services for a client of the CPEO and covered by a CPEO contract between the CPEO with the client, but only for wages and other compensation paid to the individual by the CPEO.

To become and remain certified under the new program, CPEOs must meet tax compliance, background, experience, business location, financial reporting, bonding, and other requirements.

Certified PEOs vs. Regular PEOs: What’s the difference?

  • Certified PEOs take on additional responsibilities with regard to payroll administration and federal employment tax reporting and payments of their clients.
  • Becoming a CPEO is an added layer of work to achieve. CPEO IRS designation is a voluntary program. Who raises their hand to say they want to be audited by the IRS? Certified PEOs do! They accept the additional auditing of financials and operational information in order to obtain the designated CPEO status.

Need a refresher on how a PEO helps small businesses? Check out our free guide with everything you need to know about PEOs.

Why should you choose a certified PEO?

CPEOs are proven to be well-run organizations.

Clients who engage a PEO trust that organization to have their best interests at heart, and that it is committed to doing the right thing, acting with integrity, and serving its clients for decades to come. The proof is in their reporting—IRS reports show CPEOs are well-run organizations. Clients of CPEOs have peace of mind that the CPEO is solid. Hundreds of millions of dollars flow through a PEO—demonstrating proper accounting and transmittal of funds is essential to a well run business. With a CPEO like GenesisHR, you don’t ever have to worry about the mishandling of your employee information and your money. CPEO designation means the IRS itself has no concerns about how we run our business.

CPEOs have high ethical standards.

The IRS’s rigorous background checks and quarterly financial reporting requirements ensure CPEOs remain in good standing for the life of the business. With a CPEO, you know with high confidence your employer taxes are processed accurately and timely, which minimizes your exposure. When the PEO invoice is paid, the tax obligation to the IRS has been fulfilled.

CPEOs have world-class product offerings.

At GenesisHR, we tout the fact that we are a regional PEO in the New England area, but don’t let the “regional” language deter you—we are on an even playing field with large national firms, and our CPEO designation proves it. A client is just as protected with GenesisHR as they are with a big PEO, because we’re subjected to the same rules as larger companies.

You get second-to-none customer service.

Back to being a smaller, regional PEO: Because we are a smaller firm, we are able to offer top-notch service with a personal touch to our clients and their employees.

So why aren’t all PEOs Certified PEOs?

Simply put, because not every PEO will qualify, nor are all of them willing to undergo the rigorous processes required to become an IRS-certified PEO. After all, certification is voluntary. But organizations that do become CPEOs demonstrate the importance of their business operations and finances—which will only benefit you as a client.

What makes GenesisHR stand out as a CPEO?

1. We were among the first group of CPEOs certified.

GenesisHR is proud to be among the 84 firms nationwide that were included in the first wave of approvals for Certified PEOs. We strive to do the absolute best for each and every one of our clients, and, after 28 years as a PEO, becoming a CPEO was just one more way to do that.

As a small business in a large market, becoming a certified PEO shows that our organization is as well-positioned to serve you as the “big guys” in the PEO space. Furthermore, we understand how your business operates because we, too, are a small business—and that is what separates us from others.

2. We have a history of working with best-in-class partners.

As a certified professional employer organization, not only do we have the IRS’ certification, but we also partner with industry-leading companies to bring you competitive plans and provide time-saving services that help you recruit and retain the best employees.

Our benefits partners include:

Similar to GenesisHR, these partners are committed to serving the small business community and providing exceptional service. These partnerships are valuable because they provide our clients with stability; however, we also do our due diligence by continuously reevaluating our partner offerings to ensure we have the best products and pricing the market provides.

3. Our people are second to none.

If you’ve ever endured a partnership (PEO or otherwise) that isn’t backed up with excellent, personalized service or expertise, you know just how damaging that can be to a business. We understand the importance of having a qualified, competent team on your side that cares about your business as much as you do. That level of unparalleled customer service is one of the defining characteristics of GenesisHR.

In a time when many PEOs are promoting flashy technological features as their main selling points, we distinguish ourselves differently. Our platform is modern and intuitive, but we also have the people to back up the technology! When you partner with GenesisHR, you can expect us to know you on a first-name basis; we’re not a call center, and we don’t refer to you by a client number.

4. We’re ESAC-accredited.

In addition to being a certified professional employer organization and a member of NAPEO, Genesis HR Solutions has been accredited by the Employer Services Assurance Corporation (ESAC) since 1996. ESAC is an independent, nonprofit accreditation and financial assurance entity that “provides verification of a service provider’s ongoing compliance with important financial, operational and ethical industry standards, government regulations and financial assurance”; their role is much like the FDIC’s in relation to banks. Our ESAC accreditation means we recognize the risk of liability in a co-employment relationship, and with us, you’re safe.

Learn More About The Benefits Of A CPEO

Staffed by knowledgeable, experienced individuals, GenesisHR is an asset a single in-house hire can’t compete with. Let’s schedule a free discovery call now to talk about how GenesisHR can help relieve your organization of the burden of HR, payroll, benefits administration, and more.

Contact GenesisHR Now - CTA