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Small business owners are forever searching for ways to multiply time. That is because if they had more time away from payroll and such burdensome responsibilities, they could focus on running and promoting their business. A PEO can help them accomplish this impossible feat.


What is a PEO?

A PEO (Professional Employer Organization) leases employees to an employer. This leaves the PEO to shoulder many of the business’ HR (Human Resources) liabilities and responsibilities, such as:

  • Payroll administration
  • Bookkeeping
  • Employee health administration
  • Employee benefits administration
  • Employment taxes
  • Compensation administration
  • Risk management
  • Workers’ compensation
  • Alternate dispute resolution
  • Regulatory compliance assistance

All the headaches of dealing with the IRS (Internal Revenue Service), the State Tax Commission, the Industrial Commission, Workers’ Compensation, and Workforce Services are over for you once you sign a contract with a PEO. You will no longer have to be responsible for knowing company labor policy, labor laws, and compliance issues.


How can you know a PEO will help you?

The NAPEO (National Association of Professional Employer Organizations) did a white paper in September of 2019. It is called The ROI of Using a PEO. Here is a portion of what it revealed:

  • Health benefits were 63% lower using a PEO.
  • There was a 19.6% lower total annual employee turnover using a PEO.
  • Growth rates for PEO clients were 5% higher than non-PEO clients from 2018 to 2019.
  • Those PEO clients who would recommend a PEO to a small business colleague was 98%.

You may have also heard of an ASO. An ASO is somewhat like a PEO, but there are important differences between the two.



Employer of Record

  • ASO: The employer of record is the client.
  • PEO: The PEO is the federal employer of record, and the same goes for the state, except where state law requires otherwise.

Payroll Tax Liability

  • ASO: The employer is liable for the payroll tax liability.
  • PEO: The PEO is liable for federal taxes, and the same goes for the state, except where state law requires otherwise.

Workers’ Compensation Coverage

  • ASO: Coverage for workers’ compensation is provided by the employer’s own insurance policy.
  • PEO: Coverage is provided under the PEO’s policy(ies), except where states allow otherwise.

These are only a few of the differences between ASOs and PEOs. Do you need the weight of payroll, health, taxes, regulatory compliance, and much more lifted off your shoulders? When you are ready to speak with a seasoned professional at a PEO and take the helm of your business, contact us at Quality Payroll & Benefits for a free quote. We will help you propel your company to the next level by freeing up your time.


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