Not all PEOs are created equal. So how do you decipher which type of PEO is the right fit for your company?

First of all, what is a PEO? A PEO is a Professional Employment Organization in which a company or employer can outsource any and all of their Human Resource needs such as payroll and taxes, workman’s compensation and injury claims, employee health benefits, and employee wellness programs. PEOs are a great way for employers to reduce overall costs by allowing them to outsource responsibilities to highly qualified professionals that they would otherwise have to pay hefty salaries for to employ in house. Depending on the size of your company and number of employees, you may find you need a specific type of PEO to best suit your business. While you may have heard PEOs be referred to as many terms including an Employee Leasing Company, there are three major types that should be considered when choosing the right fit for your company.

The Classic PEO:

The full-service or Classic PEO is a true “co-employer” relationship where they will assume liabilities along with you. They will handle all HR responsibilities including payroll and filing of taxes. They can also negotiate much lower health insurance rates and benefits packages for your staff because you become part of a much larger group of employees when you collaborate with a PEO. A Classic PEO will handle all of your HR needs so you can stay focused on other important business matters.

Administrative Services Organization (ASO):

An ASO is very similar to a Classic PEO in the sense that they too can provide a barrage of HR needs to your company, with the exception of certain insurance and tax responsibilities. An ASO differs slightly from a full-service PEO in the aspect that they do not assume any liability on their behalf related to employment. Even though an ASO still has the ability to prepare and file your taxes, it will be done so under your Employer Identification Number. When you enter into a partnership with an ASO, you the employer get to, or must retain all rights.

Human Resources Outsourcing Organization (HRO):

Finally, an HRO will provide your company with those crucial HR services that you may otherwise have to hire several individuals to complete. Such tasks may include attendance tracking, administering of employee benefits, organizing open enrollment, and handling payroll. These tasks are absolutely necessary but often times consuming and tedious to complete. By outsourcing an HRO to handle these responsibilities, you can achieve the skilled work output of an entire HR team at a fraction of the cost of having to hire one.

While all PEOs can provide great benefit to your business, it is important to evaluate what specific needs and goals you have, so that you can find the right fit for your company.

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