As far as the IRS is concerned, Bob Fleming -- president of Classic Remodeling & Construction in Charleston, S.C. -- is an employee of Employee Resources Management. ERM offers employee-leasing and management services to various companies throughout Charleston, including contracting businesses. People on Fleming's payroll receive their paychecks through the leasing service, including Fleming himself.
"At the end of each week, we exchange checks," Fleming says. "They handle everything -- W-2s, W-4s, quarterly filings, tax withholdings, health insurance, workman's comp -- all those sorts of things." By hiring his employees through ERM, Fleming removes most of his payroll-related paperwork and saves on insurance costs. According to the U.S. Small Business Administration, the average small-business owner spends 7% to 25% of his or her time handling employee-related paperwork.
Fleming discovered ERM six years ago when comparing costs and options to lower his insurance premiums. By changing to a leased-employee system, he estimates he saved $30,000 in his first year with ERM. The company charges Fleming a set rate per employee that includes insurance, administration and other costs. Every Monday, Fleming calls ERM with the previous week's logged hours, and on Thursdays, a courier arrives with paychecks. Every Friday, Fleming's business account is debited the appropriate amount. Fleming's own paycheck is included with his employees'.
"It's a great way to go," Fleming says. "For those who are control freaks, they'll have a hard time at first. But I've found it to be very helpful, and in fact I think remodelers will be gaining more control. The leasing company gives advice on how to handle insurance claims and more. The company we're with now has 5,000 employees."
The human resources available through ERM surpass what Fleming could offer on his own. Through the leasing company, employees can participate in benefits programs, including 401(k) options. In addition, the company provides free counseling services for small businesses, assisting participants with tax, insurance, financial and other problems.
"No company is perfect," says Fleming. "Occasionally they make mistakes, and you'll need to correct them. But if you can get with a company that's professional, they'll take care of their customers."
More information on employee leasing, as well as links to various national leasing companies, can be found at www.napeo.org, the Web site for the National Association of Professional Employer Organizations.