What is PEO?
PEO stands for professional employer organization, an organization that assumes the administrative functions of a human resources department and assists businesses with managing complex employment tasks. Most PEOs provide services related to HR, employee benefits, payroll administration and tax processing, risk management, workers’ compensation, and ACA regulations. These services and business solutions are provided through pooling together thousands of employees, which enable the PEO company to negotiate a more comprehensive benefits offering. This results in better rates, in most cases, as well as reduce employee related liability and risk.
By utilizing a “co-employment” relationship, the professional employer organization (PEO) company acts as the administrative employer, and the business owner acts as the worksite employer. The organizations utilizing PEO services retains complete direction and control of the employees, while the PEO takes on all payroll, tax filing, unemployment administration, and employer/employee compliance lability.
Work associated with transactional HR would also shift to the PEO, freeing up internal time for the business to focus on their overall growth.