All PEOs Aren’t Created Equally

Professional Employer Organizations (PEOs) are Human Resources (HR) service providers that help businesses with HR services, like processing payroll and ensuring compliance. 

Source: ProgramBusiness | Published on November 22, 2022


Professional Employer Organizations (PEOs) are Human Resources (HR) service providers that help businesses with HR services, like processing payroll and ensuring compliance.

PEOs typically assist small and medium-sized companies with their human resource needs by providing full-service employment administration and other related benefits such as health insurance, Workers’ Compensation insurance, and retirement plans. In addition, some large corporations outsource their human resources functions to a PEO to free up time and energy for core business functions.

Types of PEO Specialties include: 

PEO services are often misunderstood because there are so many types of service providers out there. For example, various PEO firms specialize in HR outsourcing, payroll processing, benefits administration, Workers’ Compensation insurance, employee benefits consulting, and tax compliance.

The critical difference between these PEO services is how much control the provider takes over the business operations. Some PEO firms provide full-service management, while others focus on providing administrative support for the company. PEO firms also specialize in particular industries such as healthcare, manufacturing, retail, construction, transportation, hospitality, education, financial services, technology, and more.

How Do PEOs Differ from Each Other?

PEOs have sought a definition for the past two decades to make them easily identifiable to the general public. Terms they use include:

  • Professional Employer Organization – PEO
  • Employee Leasing Company
  • Staff Leasing Company
  • Human Resources Outsourcing Organization – HRO
  • Administrative Services Organization – ASO

PEOs differ because some have a limited geographic footprint, while other companies use different pricing or benefits. And so, since PEOs help businesses of all sizes with their HR needs, their variations allow companies to select a PEO that suits their needs.

PEOs often differ by specializing in payroll, human resources, employee benefits, and Workers’ Compensation. Understanding the distinctions between PEOs helps business owners find the services they need. Whether you’re looking for an employer-of-record PEO or are just researching the concept of using one, it’s essential to make sure that you’re comparing apples with apples when it comes to the key features and benefits of each company offering this type of service.

How Can a PEO Help Your Business?

A professional employer organization (PEO) can help your business in many ways. By outsourcing the administrative duties of human resources and payroll to a PEO, you can reduce costs and paperwork while gaining access to valuable HR support and services that would otherwise be unavailable. Employers using PEOs can expect to:

Save money on wages owed by reducing mistakes in keeping track of time and making calculations. Payroll is a significant concern for small businesses with few employees.

Use their PEO’s expertise to ensure labor law compliance, avoid costly noncompliance fines, or have their business shut down due to safety violations.

Increase employee satisfaction through perks such as flexible scheduling, paid holidays off from work, and more vacation time than is required by law.

PEOs allow you to focus on running your business rather than worrying about payroll. Instead of spending time on payroll taxes and benefits administration tasks like calculating FICA taxes or paying into workers’ compensation funds, PEOs do it for you.

How PEOs Help Employees

PEOs help employees in many ways, such as by providing a predictable payroll. For example, you and your employees don’t have to worry about ensuring your payroll is accurate and your employees are paid on time because PEOs take care of that for you.

With fewer complicated processes in place, managers can spend more time focusing on what matters most: managing their team members’ performance so that they achieve their goals at work. Employees have more time each month because PEOs perform many internal tasks, allowing them to spend more time with their families, pursue outside interests, exercise regularly, or volunteer.

Choose a PEO That Best Meets Your Needs

Choosing a PEO that best meets your needs is essential because the right PEO will help you grow and get more done than if you did everything alone. If you’re looking for a new way to grow your business that won’t break the bank, PEOs may be worth considering. PEOs can offer countless benefits for businesses of all sizes and types—as long as they have the right ones.


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