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The Best PEO Service Providers of 2024

Updated Mar 01, 2024
Best for SMBs
  • Extensive training resources
  • Knowledgeable customer support
  • Accreditation: ESAC, IRS and BBB
  • Extensive training resources
  • Knowledgeable customer support
  • Accreditation: ESAC, IRS and BBB
Best PEO for Scalability
  • Scalable between HR tech and PEO
  • Advanced automation capabilities
  • Global EOR services
  • Scalable between HR tech and PEO
  • Advanced automation capabilities
  • Global EOR services
Best for Global Payments
  • Global payroll in 100+ countries
  • Multiple pay currencies
  • Localized benefits and support
  • Global payroll in 100+ countries
  • Multiple pay currencies
  • Localized benefits and support
Best PEO for Industry-Specific Needs
  • Custom, industry-specific plans
  • Flexible pricing options
  • Accreditation: ESAC and IRS
  • Custom, industry-specific plans
  • Flexible pricing options
  • Accreditation: ESAC and IRS
Best for Ease of Use
  • Simple user interface
  • Quick implementation
  • Accreditation: ESAC and IRS
  • Simple user interface
  • Quick implementation
  • Accreditation: ESAC and IRS

Table of Contents

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A professional employer organization (PEO) provides human resources outsourcing, benefits administration, payroll support and more to small and midsize businesses. PEOs differ from HR outsourcing companies because of the co-employment model: The PEO absorbs your employees legally to leverage large numbers in benefits markets to obtain competitive pricing. The best PEOs provide all of the HR-related services you need, including guidance that a small business without a full-time HR team needs, while ensuring employees can get their HR-related questions answered.

What Is a Professional Employer Organization (PEO)?

A PEO is a company that can take care of HR responsibilities, primarily for small and midsize companies. PEOs have drawbacks, but they can manage HR functions, like employee training and development, risk and compliance, workers’ compensation, payroll and benefits. Some PEOs bundle these services in a preset package, and others offer customizable plans with a la carte features. When you partner with a PEO, you enter a co-employment agreement, which means the PEO is the legal employer of record (EOR) for your employees.

Tip Bulb

How We Decided

Our team spends weeks evaluating dozens of business solutions to identify the best options. To stay current, our research is regularly updated.

60

Considered

30

Researched

9

Selected

Compare Our Best Picks

BDC Ribbon
Our Top Picks for 2024
Insperity PEO Services
Rippling PEO Services
TriNet PEO Services
Justworks PEO
Paychex PEO
ADP TotalSource
Papaya Global PEO
AlphaStaff
Rating (Out of 10)9.69.39.09.69.69.49.49.09.1
Best for

SMBs

Scalability

Global Payments

Industry-Specific Needs

Ease of Use

Remote Teams

Benefits Administration

International PEO

Franchises

ESAC or IRS certified

Both

None

None

Both

Both

Both

Both

None

ESAC

Contract length

Annual or multiple years

Monthly

Monthly

Varies based on customer’s needs

Monthly or annual

Monthly

None

Annual or multiple years

Varies based on customer’s needs

Minimum no. of employees supported

5

5

1

5

2

5

5

1

N/A

Customer support

Phone and email (A client liason, HR specialist, payroll specialist, benefits specialist, HR services manager, performance specialist, safety consultant)

Phone, email, chat

Dedicated CSM and 24/7 chat in-app

Varies based on customer’s needs

Account manager, live chat, phone and email

A relationship manager/client advocate, HR Business Partner (HRBP), payroll specialist, and employee benefits specialist

A dedicated team of experts and a payroll specialist

Phone, email, chat

A dedicated team of experts with phone and email support

Review Link
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Our Reviews

Insperity PEO Services: Best PEO for SMBs

  • Insperity offers training and development materials, including thousands of online books and courses.
  • The platform lets you track attendance, request time off and view compensation details, among other things.
  • To partner with Insperity, businesses must have at least five employees.
Editor's Rating: 9.6/10
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Insperity’s HR services, risk management, payroll administration, employee benefit plans and easy-to-use platform make it an excellent option for small and midsize businesses. A standout feature of Insperity is its employee training solutions. Insperity partners have access to more than 20,000 online books covering HR topics, as well as other educational materials. You can also set up on-site or online training sessions tailored to your business’s needs. Overall, Insperity offers more than 4,500 self-paced courses for employees. For these reasons, Insperity is our choice for the best PEO for small and midsize businesses.

We like that employees can easily log in to Insperity’s cloud-based portal to clock in and out, check how much paid time off (PTO) they have accrued, request time off and review their pay stubs. Insperity provides extensive services without sacrificing personalized support. Businesses that partner with Insperity receive access to a dedicated support team, including an HR manager, client liaison, HR specialist, payroll specialist, performance specialist, benefits specialist and safety consultant. The company’s technology and dedicated support can help SMBs stay compliant with ever-changing laws and regulations.

Of the PEOs we reviewed, Insperity is one of the few that are accredited by all three major accreditation agencies: the ESAC, the IRS and the Better Business Bureau (BBB).

Rippling PEO Services: Best for Scalability

  • Rippling’s cloud-hosted platform can serve businesses that have both in-office and remote employees.
  • The company provides local tax-compliance services, which is beneficial for businesses with employees located in multiple states.
  • Rippling is not accredited by the ESAC or the BBB.
Editor's Rating: 9.3/10
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As a growing small business, it can be challenging to pick solutions that can scale to meet your needs. Rippling is one of the most scalable and intuitive platforms of any PEO we reviewed. One of the advantages of Rippling is the support it provides for decentralized companies as they scale. In the age of remote work, small businesses need solutions that can scale to support workers in multiple states and countries. These employees often need different levels of access to specific software features, and Rippling allows you to customize those. For example, you can configure employee access to the applicable PTO system based on their region. If you need to hire global employees at scale, you can do so with Rippling’s new applicant tracking system. It allows you to automate your recruitment process so you can get employees hired and onboarded quickly.

Rippling also excels as a scalable platform for new and growing businesses by providing local tax registration, remote inventory management tools and workflow automation capabilities. Rippling can also offer scalable services such as benefits administration, 401(k) retirement plans, commuter tax benefits, pay-as-you-go workers’ compensation programs and extensive risk-management services.

With several automation features and the ability to easily scale between its stand-alone HR platform and a PEO model, Rippling is our choice for the best scalable PEO for small businesses.

Deel: Best PEO for Global Payments

  • Deel lets you hire employees and contractors in countries where you don’t own an entity.
  • The company offers localized contracts, benefits and support to help you stay compliant in multiple countries.
  • Deel isn’t accredited by the BBB or the ESAC.
Editor's Rating: 9/10
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Deel provides global employers with features and resources to hire, manage and pay employees and contractors across more than 100 countries and jurisdictions. Because Deel offers global PEO/EOR services, employers can hire workers in countries where they don’t own an entity. Expanding globally can be challenging, so Deel provides localized assistance and 24/7 support to help businesses stay legally compliant. It even has a Compliance Hub that not only tracks regulatory changes across hundreds of countries, but also provides monthly reports to flag potential compliance issues like expiring visas, misclassified workers and minimum wage violations. As questions arise around compliance rules or global workforce data, you can quickly and conveniently get answers with Deel AI through its Slack integration.

Deel’s centralized platform allows businesses to view and manage payroll across multiple countries at once. Deel offers useful payment features, like competitive salary insights, automated invoicing and payments, localized payroll and employee benefits, multiple currency pay options, and tax filing and payments. If you have questions or concerns about your payment obligations in a specific country, Deel can assist you, thus ensuring that you fulfill your legal obligations. With its localized support, customizable dashboard, centralized payment capabilities and various payroll reports, Deel is our choice for the best PEO for global payments.

TriNet PEO Services: Best PEO for Industry-Specific Needs

  • TriNet is ideal for companies looking for industry-specific services and support.
  • It offers several valuable online resources, including its Connect 360 services, which put you in touch with HR professionals who can answer your questions.
  • TriNet doesn’t support clients that operate in hazardous industries, like heavy construction and oil drilling.
Editor's Rating: 9.6/10
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TriNet offers industry-specific service plans, so your business can receive specialized attention based on your particular business environment. TriNet’s PEO offering provides HR services, risk management, document management, payroll processing, compensation benchmarking and benefits administration. TriNet offers custom dashboards with pre-built key performance indicators (KPIs) and visualizations so that you can gain insight into the HR trends that matter to your business and industry. What’s more, multicompany reporting access allows you to generate consolidated reports from multiple related entities simultaneously. The technology is intuitive, user-friendly and platform-responsive, making it easy to access across various devices. TriNet also offers mobile admin capabilities.

A valuable aspect of TriNet is its helpful resource offering, Connect 360. With this service, businesses can have their HR questions answered by specialized HR support professionals. TriNet clients can contact an HR rep at Connect 360 by phone, email and live chat. Connecting with tailored support can be very helpful for businesses that want to maintain compliance based on their specific industry and location.

TriNet is certified by the IRS and accredited by the Employer Services Assurance Corp. (ESAC), an independent nonprofit that is the official accreditation and financial assurance organization for the PEO industry.

Justworks PEO: Best PEO for Ease of Use

  • Justworks’ cloud-hosted platform is simple to access and navigate.
  • It is one of the few PEOs that list pricing online, which makes it easy to know whether the services fit within your budget.
  • Justworks does not offer industry-specific plans.
Editor's Rating: 9.6/10
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With Justworks, entrepreneurs and their teams can access comprehensive benefit offerings, time tracking, automated payroll, compliance support and valuable HR tools, all in one place. As a PEO, Justworks gives small and midsize businesses access to corporate-level benefits — including medical, dental and vision insurance, as well as employee retirement plans — at affordable rates. The company’s automated payroll services handle all benefits and tax withholdings for you. If you opt-in for Justworks Time Tracking (formerly Justworks Hours), the platform automatically integrates employee hours and time off into your payroll process as well, reducing the need for manual time and attendance tracking.

Justworks is one of the few companies we reviewed that’s upfront about its pricing and contract information. This lets you compare PEOs easily without getting involved in the company’s sales process. 

What separates Justworks from other PEOs we reviewed is its intuitive cloud-based platform, which can also be used on mobile devices. The platform is straightforward, but if you need assistance, the company provides designated support agents to help your team learn and use the new system. Justworks offers 24/7 expert customer support by phone, email, chat, Slack and text, and the company can help you streamline your back-office functions in one easy-to-use platform.

Paychex PEO: Best PEO for Remote Teams

  • Paychex has a cloud-based platform and a mobile app, both of which are easy to use.
  • Customers can access free demos for applicant tracking, time and attendance, performance management and employee onboarding.
  • Paychex requires new users to have at least five employees and sign a one-year contract.
Editor's Rating: 9.4/10
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Paychex is an ideal PEO solution for remote teams with five or more employees. It is a national company that offers customizable plans and flexible pricing. We like that it supports a wide range of business types and sizes, regardless of whether your employees are in the office, at home or a mix of the two. Businesses that partner with Paychex can receive essential HR functions, like HR administration, payroll processing, expense management, employee benefits information and risk-management support. And as your business changes or expands to multiple states, you can add or remove services accordingly.

Additionally, Paychex can help you attract top employees and remotely onboard them once they join your company, both of which are vital for businesses with remote or dispersed teams. For example, you can include fillable forms and documents with e-signature capabilities in your new hires’ onboarding tasks. Contributing to Paychex’s appeal, the company’s easy-to-use, cloud-hosted platform lets you tap into your services from wherever you are located. To reduce the number of HR functions you need to perform manually, you can utilize AI and voice recognition through Paychex Voice Assist. In addition, the Paychex mobile app ensures that employees have access to their payroll and benefits information both inside and outside the office. With Paychex’s new payroll pre-check tool, employees can digitally preview their paystubs before payday, which is a great way to ensure remote workers are getting paid accurately and on time.

ADP TotalSource: Best PEO for Benefits Administration

  • ADP is a national company that has significant bargaining power with healthcare providers.
  • The platform has intuitive and simple dashboards where you can view and modify your benefits.
  • ADP does not list its pricing online, so you must contact a representative for a quote.
Editor's Rating: 9.4/10
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ADP TotalSource, which represents more than half a million employees across the U.S., offers extensive services that are ideal for businesses of all sizes. What sets ADP TotalSource apart from other PEOs we reviewed is its employee benefits administration. Employers can access Fortune 500-level benefits, a variety of flexible service plans and add-ons, an intuitive user platform, and seamless online benefits enrollment.

While the company’s benefits administration is a highlight, ADP TotalSource also provides some of the best PEO services of any company we reviewed. It offers all of the services you are likely looking for in a PEO, including new-hire onboarding, employee retirement plans, work-life assistance programs and full-service payroll.

ADP also offers dedicated specialists to help you navigate tricky HR issues, including benefits enrollment. Because of ADP’s large size and high level of personalized attention, it’s one of the few PEOs on our list that can grow with your company. ADP TotalSource’s friendly and helpful support team, in addition to the company’s comprehensive PEO services and benefits, led us to select it as the best PEO for benefits administration.

Papaya Global: Best International PEO

Papaya Global
  • Papaya Global can support businesses in more than 160 countries.
  • The PEO provides local and global benefits.
  • Papaya Global is more expensive than some domestic PEOs we reviewed.
Editor's Rating: 9/10

Papaya Global provides international businesses in more than 160 countries with PEO support and compliance, which is much greater than most competitors we reviewed. A global presence is essential for small businesses with employees and teams spanning multiple countries. The breadth of Papaya Global’s services and its extensive worldwide presence make this PEO an ideal partner for international small businesses. Because of Papaya Global’s flexible service offering across multiple countries, it is our choice for the best PEO for international businesses.

Papaya Global stands out for its ability to serve employees across different locales. It’s one thing to support employees who are located in a single country, but if your workforce is dispersed across multiple international locations, there are several factors you must consider, such as making sure that all of your employees are paid appropriately and that their benefits are administered correctly. Papaya can handle these responsibilities and more. For example, Papaya supports pay exchanges, so workers earn paychecks in their own currency, as well as provides talent acquisition and employee onboarding services. Papaya also recently launched its embedded payroll payments platform – a first of its kind technology that allows employers to automate and process global payroll directly within the Papaya platform, bypassing third-party partners.

The company supports all employee types, including full-time, part-time and contract-based workers.

AlphaStaff: Best PEO for Franchises

AlphaStaff
AlphaStaff logo
  • AlphaStaff is a flexible PEO solution with customizable plans.
  • It can help with unemployment claims management.
  • AlphaStaff doesn’t list pricing online.
Editor's Rating: 9.1/10

AlphaStaff is a flexible PEO that offers a wide variety of HR services and features with tailored plans and pricing. Because franchises often have unique requirements, it is ideal for these businesses to build a plan that meets their exact needs. AlphaStaff offers essential HR services, including employee training and development, strategy and handbook creation, compliance assistance, termination assistance, payroll processing and tax filing, and employee benefits administration.

One of our favorite aspects of AlphaStaff is its support and guidance, which we believe is a real benefit to franchise businesses. When you partner with AlphaStaff, the company can review your organization to develop strategies that match your current and growing needs. The PEO also offers benefit advisory services to help you through the process of administering benefits in an efficient and compliant manner. If you have any questions, you can easily reach out to your team of support experts by phone and email. A flexible PEO with such a large selection of features to choose from is an ideal solution for franchises.

How PEOs Price Their Services

PEOs offer two main pricing structures for small and midsize businesses: They charge either a per-employee fee (roughly $40 to $160 per month) or a percentage of your total monthly payroll (roughly 3% to 12%). There are advantages and disadvantages to both types of pricing. The best pricing model for your business depends on factors such as your business type, the number of employees you have and the PEO services you want.

PEOs typically do not offer free trials of their HR services, and contract lengths and structures vary by company. Some PEOs only offer long-term contracts, while others don’t require a contract at all. Cancellation policies also vary, but business owners typically need to provide at least 30 to 60 days’ notice before terminating their PEO service. Some companies allow you to leave at any time for any reason; others charge you a fee for leaving.

Below are other crucial items to address with the PEO service you’re considering. You should go over this information, even though it may be available on the company’s website, with a member of the PEO’s sales team to gain a complete understanding of the PEO’s services.

Plan Structure

One thing to pay attention to is how a PEO packages its services, like employee onboarding and development, insurance policies, workers’ compensation claims, payroll processing, risk and compliance management, and HR tasks. Some PEOs provide a one-size-fits-all solution, whereas others offer customizable services that you can add or remove to fit your small business’s needs. Both models have advantages and disadvantages. A bundled solution means you can grow into all of the features without changing the pay structure, while an a la carte option is more tailored to your business and can save you money if you need only a few services, such as payroll and health insurance.

Additional Fees

Inquire upfront about additional fees. For example, some companies charge a fee if you cancel service. Thoroughly review the materials the sales team gives you to spot any costs associated with service. If you’re not sure, ask the sales representative. Also, remember that the pricing model, whether it charges per employee or a percentage of income, does not include additional costs for healthcare and other employee benefits.

Employee Minimums

Many of the PEOs we evaluated require a minimum number of employees — usually five — to qualify for their services. (Another type of minimum you may see is a minimum monthly salary if your business is below a certain employee threshold.)

If you don’t qualify, many companies offer administrative services organization (ASO) or HR outsourcing services. While these services may be similar to the PEO model, they do not have co-employment agreements.

Make sure you understand what your PEO expects from you. You don’t want to have to cancel your service or pay an additional fee for falling below the PEO’s minimum requirements.

How do PEOs Work?

PEOs operate under a co-employment model, meaning your employees appear on the PEO’s “books” for legal and tax purposes. This allows PEOs to act as massive corporations with hundreds of thousands of employees. PEOs can negotiate contracts with employee benefits providers for more favorable rates on unemployment and workers’ compensation insurance. It also gives them the power and scope to build and leverage powerful time-tracking and payroll technology for small businesses.

When you sign on with a PEO, you’ll work closely with customer success managers (and other team members) to build the services you need for your small business. As your business grows, your PEO can adjust to meet your needs. Working with a PEO under the co-employment model essentially means that you’re partnering with a team of specialists to build out the administrative and back-end processes of your organization. If it makes sense for your business financially, these organizations can take a lot of the stress out of running your business so you can focus on more pressing needs.

Roughly 173,000 small and midsize businesses partner with PEOs to get high-quality benefits and proper HR support to help their businesses run smoothly. A PEO must adhere to both state and federal regulations, so some companies are divided by region or state.

Did You Know?Did you know

There are nearly 500 PEOs serving and operating in all 50 states.


As you search for a PEO, keep your state and region in mind; some PEOs are qualified to serve small businesses in certain states, whereas others have global partnerships. Most of the companies we reviewed are qualified to offer coverage in all 50 states. If you’re curious about whether a particular PEO operates in your state, you can look it up in the National Association of Professional Employer Organizations’ (NAPEO) directory.

What is a Professional Employer Organization or PEO?

Professional Employer Organization Features

PEOs provide several beneficial resources for small businesses. Because they focus on HR tasks and administration, you are left with more time to focus on your business. On top of that, PEOs can offer better benefits to your employees than you might be able to obtain on your own. This can help you attract and retain top talent. Many employer organizations use mobile applications and online portals for small businesses and employees to easily access important information, like payroll, benefits and training courses.

Although not every business will need every PEO feature available, here are some of the top PEO features that could help your business.

Administrative HR Services

One advantage of partnering with a PEO is having a professional organization take care of all your HR services. PEOs can create your employee handbook and policies, onboard new hires, cover HR administrative tasks, offer unemployment assistance, and help with compliance reporting and employee termination. They often have online HR reporting tools, employee self-service options and advanced HR technology.

Did You Know?Did you know

According to the NAPEO, companies that partner with a PEO grow 7 to 9 percent faster, and are 50 percent less likely to go out of business, than companies that don’t partner with a PEO.

Employee Benefits

Because PEOs co-employ multiple businesses’ employees, they can offer better employee benefits than you might otherwise be able to provide. PEOs typically offer medical, dental, vision, life, and long- and short-term disability insurance. Some offer additional plans, like flexible spending accounts (FSAs), health savings accounts (HSAs) and health reimbursement arrangements (HRAs).

Employees often receive retirement plans, such as 401(k) plans, as well as additional benefits, like commuter and parking discounts, home and auto insurance discounts, and access to employee assistance programs. Many employers receive guidance on Affordable Care Act (ACA) compliance, while their employees get access to consulting services by licensed benefits professionals. The benefits vary by PEO, as does the cost.

Payroll

PEOs offer small businesses an affordable way to package all of their HR responsibilities, including payroll processing and taxes. PEOs can process your employee payroll, prepare and distribute payroll checks, administer direct deposits, and process employee liens and garnishments. PEOs take care of your employees’ paid time off, track their sick and vacation time, and prepare and distribute their W-2s.

Many PEOs offer quarterly and year-end state and federal tax deposits and filing, along with detailed management reports. The PEO you partner with should be able to handle all of your employee payroll needs. By including this cost in the PEO’s total, you can ultimately save money on your payroll.

Risk and Compliance

Managing risk and legal compliance is an important part of running a small business. However, if you work with a PEO, it can manage much of that for you. Depending on your business’s industry, this could be a great deal of work handled by someone else. The level of compliance and risk that a PEO manages varies, but many PEOs perform tasks such as managing ACA coordination and compliance, running on-site safety inspections, performing accident investigations and job hazard analyses, allocating workers’ compensation coverage, and maintaining OSHA compliance for your business.

A PEO ensures that your business takes the appropriate measures to maintain workplace safety. Some PEOs provide employment practices liability insurance (EPLI) coverage, safety and loss prevention programs, Health Insurance Portability and Accountability Act (HIPAA) compliance, and Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance. There are several other compliance measures that PEOs can take to keep your employees safe and ensure that your business abides by legal employment guidelines. This alone is reason enough for some businesses to partner with a PEO.

Training and Development

Some PEOs offer employee training and development. Many provide online and on-site training courses that your employees can take to enhance their skills. They can access courses on communication, sexual harassment and discrimination, hiring and firing, disciplinary actions, leadership, social media and workplace technology, as well as get industry-specific training.

Not all PEOs provide continuing-education courses, and the courses that PEOs do offer vary. However, at the very least, most PEOs can train your staff on necessary workplace concepts, like avoiding workplace discrimination and sexual harassment.

Customer Support

Make sure the PEO you partner with assigns you a designated team of experts who can handle your HR, risk management, benefits and payroll needs. Work with a company that provides specialists in each area, along with a relationship manager who can help you take advantage of all of the services the PEO offers. Sometimes, the HR consultant doubles as a relationship manager, which is also a good option. The best companies have HR consultants who are certified by the Society for Human Resource Management (SHRM). SHRM certification ensures that your account coordinator is more than just a company relationship manager.

Bottom LineBottom line

A PEO provides many services — such as administrative HR functions, employee benefits administration, payroll processing, talent management, risk management and compliance — that can help you manage your workforce, save time and money, and maintain legal compliance.

How to Choose a PEO

Generally, it’s a good idea to get as much information as you can about a company before you contact it. That way, you get a good understanding of the services the PEO offers, as well as the pricing and contract structures, before heading into the sales process.

Working with accredited agencies is always a good option, but accreditations are not the be-all and end-all of the PEO world. A few companies on our list that aren’t accredited are reputable. Here is a three-step guide for choosing a PEO that can seamlessly integrate with your company.

1. Define your business’s needs.

The first step in any buying decision is to understand exactly what your company needs. In the case of a PEO, are you looking for health benefits? COBRA administration? A seamless cloud-based platform to keep HR information organized? It’s also important to partner with an organization that can support your growth. That is one of the major advantages of working with a PEO: It can help your organization grow from an administrative perspective.

TipBottom line

When you’re choosing a PEO, consider your current and future needs. As your company changes and more people are brought on board, your PEO should be able to scale with you.

2. Make a short list of potential companies.

Our reviews are a great resource. Learn about the services offered by the PEOs on our list, and get familiar with their customer service and the implementation process. Any of our best picks would be a good option for your business. It’s your job to match your needs to the right company. This is especially true when it comes to pricing and contract structure. Focus on the size of your organization, your growth plans and whether a specific PEO structure would be the best for your business.

Once you’ve narrowed your options to two or three PEOs, you can start the next step in the process.

3. Contact PEOs, and make your decision.

Contact the sales teams of PEOs you’re interested in so you can get a specific picture of what your business partnership would look like. Ask about additional fees, estimated costs and other features. The sales process should be smooth and simple. If you have trouble, it could be an early indication of a partnership you shouldn’t pursue. Decide on the PEO that fits your business’s needs most closely, and work with a company that you can grow with as your business reaches the next level.

Professional Employer Organization FAQs

A wide range of businesses can benefit from partnering with a PEO. Although PEOs typically cater to small and midsize businesses, some can also serve large organizations. Some PEOs have an employee minimum — typically, two or five employees — meaning you must have at least that many employees to use their services.

While some PEOs focus on specific industries, most PEOs can benefit nearly every industry — for example, education, financial services, manufacturing, e-commerce, marketing and advertising, life sciences, media and entertainment, nonprofits, retail, and technology.

When small businesses offer competitive benefits to potential employees, they are in a better position to attract and retain top talent. This is where PEOs come in. A PEO allows you to offer your employees affordable health benefits with reputable health insurance companies, as well as additional benefits, such as supplemental insurance plans (e.g., FSA, HSA and HRA), employee perks (e.g., home and auto insurance discounts, parking and commuting benefits), and retirement savings accounts, like 401(k) plans.

Additionally, a PEO can help you maintain risk and legal compliance. This can reduce legal problems for your business, helping you earn a positive reputation in your community and reduce employee turnover. Because many employees seek an employer that can offer continued education, partnering with a PEO that provides training and development courses can entice top talent as well.

Although they seem similar, PEOs and staffing companies serve different HR needs. The primary benefit of a PEO is that it handles tedious and time-consuming HR tasks, such as administrative work, payroll, employee benefits, risk and compliance, and employee training and development.

A staffing company, on the other hand, primarily serves short-term or temporary employment needs. Staffing companies handle other HR-related tasks, such as payroll and unemployment taxes, but often with much higher fees for these services. Small businesses should consider partnering with a staffing company only if they need temporary staffing.

A PEO is an affordable HR option for many small businesses because it can handle all of your HR functions under a co-employment model. A PEO removes the burden of many HR tasks and assures small businesses that critical functions such as risk and compliance are being managed by HR experts.

HRO services can handle many of the same HR functions as a PEO can, but they operate as separate entities instead of forming an employer partnership. Businesses that use an HRO can choose the HR functions they need to outsource — for example, only payroll and employee benefits or a full-service HR suite. HR outsourcing is better for larger companies that need assistance only with specific HR tasks.

A PEO and an ASO both provide HR services, with one major difference: the employment relationship. PEOs use a co-employment model (meaning the PEO is the employer of record for employees). Under an ASO partnership, the ASO offers assistance with HR services while your organization remains the employer of record for your employees.

Another difference between PEOs and ASOs is the specific services they offer. Both PEOs and ASOs offer HR services, but ASOs do not provide workers’ compensation insurance or employee benefits programs like PEOs do. ASOs are also more flexible in the HR services you can outsource, whereas PEOs typically bundle services.

The best PEO service providers satisfy your HR needs, whether they are HR administration, employee benefits, payroll, workers’ comp, risk and compliance management, or training and development. They use the latest technology and mobile applications so that businesses and employees can easily access their information. Great providers offer HR expertise and customized, one-on-one assistance to help you navigate your PEO services, regardless of how long you’ve worked with them. The best PEO services are transparent, easy to communicate with, and accredited by the ESAC and the IRS.

When you partner with a PEO, that company is technically a co-employer of your staff. This can cost you some internal control over your team and processes, and possibly result in an outside influence on your company culture. Having an outside company manage your payroll and taxes might make you feel a lack of security as well. For these reasons, it is important to partner with a PEO you can trust. The right PEO can be a great asset to your company.

Transitioning your HR processes to a PEO is a big undertaking, but it can ultimately simplify your HR responsibilities. The average PEO transition takes roughly four weeks, starting at the beginning of a payroll cycle, but it could take anywhere from three to six weeks. During this implementation period, the PEO will work closely with your team to ensure that all of the proper paperwork is complete and successfully transitioned.

One advantage of using a PEO is the ability to recruit top candidates. PEOs typically offer small businesses access to comprehensive employee benefits that they otherwise might not be able to afford, and these benefits can greatly improve the quality of the employees they can hire and retain.

Additionally, PEOs employ experienced HR professionals who can help small businesses implement recruiting and hiring best practices. They understand the current employment laws and regulations that apply to recruiting, so they can help small businesses stay compliant.

WHAT TO EXPECT IN 2024

The needs of employees have changed drastically over the past few years, which means employers must seek to partner with PEOs that are evolving to meet those needs. Because the PEO market is projected to grow exponentially over the next few years, employers can feel confident that top PEOs on the market are doing just that. Employers should expect to see advanced tools — such as employee self-service capabilities, AI integration, and legal compliance assistance — become staples of PEO offerings.

As many employees have remote and hybrid work arrangements, they need software to be accessible both inside and outside the office. PEOs offer extensive cloud-based technology platforms that are simple and easy for everyone to use from any location and device. This is essential for companies with different types of workers, especially for ensuring that sensitive HR-related information is properly secured.

The popularity of generative AI exploded in 2023, forcing many organizations and people to modify the way they operate. We expect the use of AI to continue and expand in 2024, making its way into HR solutions like PEOs. As the PEOs evolve, we anticipate seeing more automation features made available through AI technology.

By working with a PEO that’s up to date with technology, you can track flexible work hours and provide remote workers with a standardized, simple HR, payroll and benefits solution. This can go a long way for smaller companies that are looking to combat burnout among managers and employees alike, as many processes can be automated, especially from an HR perspective.

Although legal compliance has always been important, the shift to hybrid and remote work has made it even more vital. Many organizations are hiring international workers, revealing the need for global PEOs with expansive HR compliance knowledge. In the coming year, we expect more PEOs to expand their capabilities globally, helping companies navigate the various employment and labor laws across multiple cities, states and countries.

Skye Schooley
Senior Lead Analyst & Expert on Business Operations
Skye Schooley is a human resources writer at business.com and Business News Daily, where she has researched and written more than 300 articles on HR-focused topics including human resources operations, management leadership, and HR technology. In addition to researching and analyzing products and services that help business owners run a smoother human resources department, such as HR software, PEOs, HROs, employee monitoring software and time and attendance systems, Skye investigates and writes on topics aimed at building better professional culture, like protecting employee privacy, managing human capital, improving communication, and fostering workplace diversity and culture.
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