Let’s face it: no one enjoys paying taxes. And no employer relishes the tedious task of administering employee withholdings. At best, payroll tax administration is a necessary evil, particularly for the owners of smaller businesses.

The National Federation of Independent Business, for example, ranks the complex U.S. tax code among the top concerns of small business owners. Payroll tax administration is a veritable minefield for employers, with cumbersome rules, mind-numbing details, oft-changing regulations and significant fines when missteps are made. Small business owners can waste countless hours deciphering, implementing and reconciling tax payments for their workers.

Even the penalties for non-compliance are complicated.

Yet many sophisticated business owners aren’t giving payroll tax administration a second thought. That’s because they subscribe to the services of a professional employer organization, or PEO. PEOs help companies absorb all of the elements of payroll tax administration, along with other complicated employee benefit and human resources tasks.

PEOs partner with their clients to share the responsibility and liability involved in the “business of employment.” By shifting the burden of payroll tax administration to a PEO, business owners can focus instead on growing their business. Among the payroll and tax services a PEO takes on:

• Computing withholdings and deductions
• Calculating FICA, Federal Unemployment (FUTA) and State Unemployment (SUTA) taxes
• Preparing and distributing W-2s
• Managing employer tax deposits and filings

A PEO also handles the tricky withholdings issues that arise for employees who work in offices in multiple states, or who live in one state and work in another (a relatively common geographical scenario here in New England).