human resources, Professional Employer Organization (PEO) Services


You’ve decided to outsource your payroll, but now what? One of the most difficult and most common decisions that business owners face is which type of payroll outsourcing to utilize—either a Payroll Service Provider (PSP) or a Professional Employer Organization (PEO).   

A PSP processes and performs all functions related to paying employees and paying federal payroll taxes. On the other hand, a PEO does everything a PSP does, but much, much more.  

So, what does a PEO do that a PSP doesn’t?  

A PEO handles many aspects of Human Resource Management from tax administration and government compliance to employee onboarding and verifications. 

PEO’s are known for their co-employment, or Employer of Record, which allows you to outsource specific managerial tasks including the administration of employee benefits, scheduling, and payroll. This also includes the management of your business’ workers compensation policy. However, this doesn’t mean that a PSP would not be able to assist with workers compensation insurance or employee benefits. While a PSP may not have the resources to provide these services in-house, they may have partnerships with companies they can recommend.   

How do I know which service is the right fit for my business?  

If you manage a start-up business and only manage one or two employees, chances are you don’t need the full-service benefits associated with a PEO. In this case, you might be better off outsourcing your payroll or HR process.   

However, this doesn’t mean your small business wouldn’t benefit from partnering with a PEO. HR Administration requires a substantial amount of time and effort which can be distracting form your primary focus-–growing your business. In many cases, PEO’s offer professional advice and guidance to help you make educated and strategic business decisions while complying with federal and state employment laws.   

When it comes down to it, choosing which type of payroll provider depends on your business goals and needs. Before educating yourself on the difference between a PSP and PEO, it is important to define your business goals and needs. Want to avoid the hassle associated with payroll and quarterly reports, or reduce stress related to recruiting, compliance, and benefits administration? No matter what your business needs, chances are, a PEO can help you accomplish your goals, AND help save you time and money. 

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