Payroll Shouldn’t be such a pain
Payroll services for cannabis companies are especially challenging. For example, Paychex Inc., recently withdrew from providing payroll services to cannabis companies leaving about 300 clients high and dry. Workers’ Compensation is another challenge that cannabis companies face forcing many to buy coverage from their State provider fund of last resort at inflated rates. more
A Professional Employer Organization or PEO is an Employer Services provider that aggregates many companies’ payroll and related requirements and manages them for the individual companies. This allows them to offer top notch professionals to manage the clients’ payroll-related needs at a low cost. As an illustration of the savings related, I like to use a “bench strength” example. If a cannabis company or any company were to hire the professionals required to handle high-grade employer services staff internally, it would look something like this:
Expert compliance paytech $ 55,000 yr
HR manager $ 75,000 yr+
Benefits administrator $ 50,000 yr
WC Risk manager $ 75,000 yr+
Total payroll before taxes $ 255,000 yr +benefits
Guess what, those highly paid staff would likely be sitting on their hands most of the time. A PEO has a cadre of that level of staff that comes off the bench as needed and provides services. A PEO charges an administrative fee of between 2%-3% of gross payroll for those services. They also provide Workers’ Compensation insurance at reduced rates because they aggregate all their clients together to get lower rates from the Workers’ Compensation insurance companies.
Let me know by email if you think this might work for you.
Peter VanSon, CPA