PEO Services for SMBs

A PEO provides small and medium-size businesses with HR admin support and services. This can include payroll, access to benefits that small businesses may not typically provide, workers compensation, and risk mitigation services.

Outsourcing human resources means hiring an outside company to help you manage HR administration, such as payroll and strategic human resources planning, including talent retention, risk mitigation and legal compliance.

Co-employment is how we refer to the business relationship between a small business and a PEO. The business owners remain in control of day-to-day activities and direction of the company, but allocates some responsibilities relating to their employees to the PEO. A detailed service agreement is made before working together.

There are numerous advantages to working with a PEO. You can access better benefits, mitigate employment-related risk and help lower the cost of running your own internal HR team. Best of all, you’ll have more time to focus on growing your business. Learn more about PEO benefits

The term “ASO,” on the other hand, stands for Administrative Services Organization. The most important difference between an ASO and a PEO is that the service provided through an ASO does not establish a co-employer relationship. For example, an ASO does not process payroll and remit and report payroll taxes under its own FEIN, nor can it be the sponsor of any health and welfare benefits offered to its customers’ employees.

A PEO offers its services as a “co-employer” or through a “co-employment” relationship. Co-employment refers to the fact that the PEO allocates, with each of its clients, employer responsibilities relating to the employees the client brings into its arrangement with the PEO, which are usually referred to as worksite employees. Typically, the PEO and client responsibilities are expressly described in a service agreement between the PEO and the client. With a PEO, business owners retain complete control over their workforce, company culture and brand.

An ASO does not establish a co-employment relationship with its customers, does not process payroll or report taxes under their own tax ID. ASOs don’t acts as sponsors of benefits plans or provide small businesses with access to benefits. The customer remains the sole sponsor.

Read our blog for more details on the differences between a PEO and an ASO.