FAQs

A Professional Employer Organization (PEO) delivers cost-effective, outsourced services for human resources, payroll and tax, employee benefits, compliance, risk management, and many other HR-related functions.

Through a co-employment arrangement, the PEO shares certain employer responsibilities with your business. You retain full control over daily operations and employee management, while the PEO handles the administrative HR tasks behind the scenes.

Partnering with a PEO allows your business to streamline HR operations, reduce administrative burdens, and access Fortune 500-level benefits at a fraction of the cost. A PEO handles essential functions like payroll, employee benefits, compliance, and risk management, so you can focus on growing your business, not managing paperwork.

Additionally, PEOs help you stay ahead of employment laws and regulations, reducing your exposure to compliance risks. With expert support and scalable solutions, a PEO empowers your business to operate more efficiently, attract and retain top talent, and gain a competitive edge in your industry.

While services can vary, the typical PEO serves four core business functions: HR guidance and support, employee benefits, risk and compliance, and HRIS technology. These may include payroll and tax administration, employee benefits management and workers’ compensation, as well as additional services such as recruiting, time and attendance, and employee training programs.

Choosing the right PEO comes down to more than just services offered. Look for a PEO with exceptional customer service and a responsive support team that treats you like a priority, not a ticket number. This will be reflected in a high Net Promoter Score (NPS), which is a strong indicator of how well a PEO supports its clients and earns their trust over time.

Certifications matter, too. A PEO should be IRS-certified as a CPEO and accredited by organizations like ESAC and SOC, ensuring financial stability and regulatory compliance.

Industry experience is another key factor. The right PEO for your business will have a proven track record of supporting industries like yours, with tailored solutions that align with your specific needs, challenges, and goals.

Certified PEOs (CPEOs) have met the IRS’s rigorous financial, legal, and reporting requirements. Working with one may afford you certain financial protections and tax benefits. A CPEO certification provides:

• Tax restart elimination, meaning the wage-base “restart” is removed for certain federal payroll tax purposes if you join or leave a CPEO relationship mid-year.
• Financial assurance because CPEOs are required to post a bond each year, guaranteeing payment of its federal employment tax liabilities.
• A trusted partnership, as PEOs must renew their certification periodically, proving that they consistently meet fiduciary standards and other requirements.

When you have a PEO partner handling HR administration, benefits management, and regulatory requirements, you can devote more time to high-value business activities and focus on the mission of your business. The National Association of Professional Employer Organizations (NAPEO) reports that the average business grows 9% faster when using a PEO.

A PEO gives you access to a dedicated team of experienced HR professionals who specialize in solving the everyday challenges of running a business. From employee benefits and tax administration to labor law compliance and workers’ compensation, they handle the complexities so you don’t have to.

With deep expertise and a passion for helping businesses succeed, your PEO team streamlines operations, reduces risk, and improves overall productivity.

PEOs may save businesses money by reducing administrative costs, improving benefits affordability, and minimizing risks related to non-compliance.

While no business is completely immune to employment risks, a PEO serves as a proactive partner in identifying, managing, and minimizing them. With deep expertise in compliance, labor laws, and HR best practices, a PEO helps protect your business from costly issues so you can operate with greater confidence and peace of mind.

Employees will benefit from improved HR support and access to better benefits, but they will still see your company as their primary employer.

While every company is different, certain characteristics make a business especially well-suited for a PEO partnership:

• Number of employees: PEOs are typically a great fit for white-collar small and mid-sized businesses with between 10 and 300 full-time employees.
• Growth-focused mindset: Companies looking to scale often benefit most from a PEO, as it allows leadership to focus on growth and strategy rather than getting bogged down by HR administration.
• Desire to offer competitive benefits: PEOs give businesses access to high-quality, Fortune 500-level employee benefits typically reserved for large corporations, including healthcare, dental, vision, and 401(k) retirement plans.
• Industry alignment: PEOs are particularly valuable in industries such as financial services, charter and private schools, healthcare, technology, professional services, and marketing, where talent retention, compliance, and operational efficiency are critical.

While a PEO can handle your daily HR tasks, it will not:

• Replace your HR Manager
• Communicate with your customers
• Control hiring and firing decisions
• Set pay rates or schedules
• Help with sales, marketing, or customer acquisition

There are many HR solutions available today, so it’s common to mistake similar services for PEOs.

However, a PEO is not a/an:

• Employee leasing company
• Staff leasing company
• Human resources outsourcing organization (HRO) (but may offer HRO as a service)
• Administrative services organization (ASO)
• Managed payroll organization

In a PEO partnership, your business enters into a co-employment relationship, meaning the PEO becomes the employer of record for tax and benefits purposes. This allows the PEO to assume responsibility for key HR functions such as payroll, tax filings, risk management, and workers’ compensation, while also giving your employees access to Fortune 500-level benefits and perks that are typically out of reach for smaller companies.

With HR Outsourcing (HRO), your business remains the employer of record and can choose to outsource some or all HR functions. This might include support for administering existing benefits, handling day-to-day HR tasks, or simply managing payroll, freeing up time and reducing the burden on an overstretched HR team.