J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line

Temporary Workers and Outsourced HR

There are other ways to obtain workers who are not independent contractors and also are not your employees:

• Temporary workers. If you engage someone through a temporary agency, such as Kelly Services or Manpower, the worker is the employee of the agency. The agency, and not you, is responsible for all employer obligations. You merely pay the agency a fee for the services (the deduction for this fee is explained in Chapter 22).
• Outsourced HR. You may continue using existing employees, but shift employer obligations to an outside source. For example, a professional employer organization (PEO) effectively creates a co-employer situation. You have the right to hire and fire, but the PEO is responsible for all HR functions, including payroll taxes and insurance. Again, the PEO fee is deductible (see Chapter 22).