>>>What’s A PEO?

What’s A PEO?

What is a PEO?

PEO stands for Professional Employer Organization.

A professional employer organization provides comprehensive human resources services to small to mid-sized businesses. They work alongside business owners to create a customized package of services that includes:

  • Payroll
  • Employee Health Insurance
  • Employee benefits such as retirement plans and 401(k)s
  • Business tax administration
  • Workers’ compensation
  • Regulatory compliance assistance
  • Employee relations
  • Customized HR reports

PEO’s do this by becoming the “employer of record” for your employees. In this arrangement both the PEO and the business have an employment relationship with the workers. The PEO assumes much of the responsibility and liability for the business of employment, such as risk management, human resources management, and payroll and employee tax compliance, while the client company maintains the day-to-day supervision of their staff and all the management responsibilities.

Basically, a PEO is there to help companies manage the administrative (and let’s be honest, tedious) side of their business, and give the owners or managers more time to focus on operations, marketing, and growth. Your company is still in charge of the company culture, hiring and firing, and other day-to-day activities and responsibilities. You are still the “common law employer” for all of your employees.

Besides administrative support and time-savings, one of the biggest ways a PEO can help businesses is through increased buying power. By pooling many companies together and creating large employee pools, PEO’s can help small to midsize business gain access to lower employee health insurance rates that are usually only available to much larger organizations.


Here’s some of the latest industry stats/findings from the National Association of Professional Employer Organizations:

  • PEOs provide a conservative estimate of 21% cost savings of HR administration.
  • Expected annual median revenue growth for PEO clients is 40% greater than that of comparable non-PEO companies.
  • PEOs allow their clients to focus on their core business, and not HR related functions.
  • 98% of PEO clients would recommend a PEO to business colleagues.
  • PEO clients grow up to 9% faster than other comparable business that don’t use a PEO.
  • PEO clients were 16% more likely to report an increase in profitability compared to other businesses not using a PEO.
  • PEO clients were 50% less likely to go out of business compared to businesses not using a PEO.
  • Employee turnover is 10-14% lower for PEO clients compared to businesses that don’t use a PEO.
  • PEO small businesses are significantly more likely to offer retirement plans which help attract and retain employees.


For more information about PEO’s and whether it may be a good fit for your business..