How Many PEOs Are There in the US?

There are about 500 PEOs in the United States. A PEO, or professional employer organization, is an outside company that takes over payroll, benefits and HR paperwork for small and mid-sized businesses. The industry's trade group, the National Association of Professional Employer Organizations (NAPEO), counted 502 at the end of 2025, serving 5.4 million employees at 233,000 businesses. Other lists give other numbers because they count different things. The IRS list of certified PEOs has 122 entries, but each entry is a separate company registration, or legal entity, and one PEO can run many of them.

The short version

• What a PEO is: an outside company that co-employs your staff, putting them on its payroll for taxes, benefits and often workers' comp, while you still run the day-to-day work and decide who to hire. More in our plain guide to PEOs.
• How many there are: about 500 companies, by the most careful count. The number has been edging down since 2022, while the number of people they serve keeps growing.
• Why you see other numbers: the IRS counts legal entities that chose to be certified, and a private accrediting group, ESAC, keeps its own shorter list. Neither is a count of all PEOs.
• What to do with it: there are hundreds of PEOs, but a few dozen large ones serve most of the employees. When you compare PEOs, check certification, accreditation and state licensing for the ones you are considering.

The short answer: about 500 PEOs

NAPEO's 2026 industry study, written by the research firm McBassi & Company, counts 502 PEOs at the end of 2025. Together they serve 5.4 million people at 233,000 client businesses. NAPEO calls those people "worksite employees": the staff of PEO clients who are paid through the PEO.

The researchers built the count from the ground up. They started with "over 1,425 company names", including every public state registry of PEOs. They kept a company only if it has "a current public presence indicating that it offers PEO or co-employment services." They removed duplicates and companies fully absorbed by another PEO, so "each PEO is included only once."

Three years earlier, the same method found 523 PEOs serving 4.5 million people at 208,000 businesses, at the end of 2022.

Why the counts differ

Each list answers a different question. This table puts them side by side.

Three things explain the gaps:

• IRS certification is optional. The law that created it asked the IRS to set up a voluntary certification program. Most PEOs have not joined it, and not being certified does not make a PEO unsafe. What certification changes is mainly tax: a certified PEO is generally "solely liable" for the federal employment taxes on the wages it pays your staff. Our guide to what IRS certification means covers the rest.
• The IRS lists legal entities, not companies. A large PEO often runs several entities. On the IRS list dated August 7, 2026, ADP TotalSource holds 18 of the 122 entries, Nextep 7 and Justworks 4. The IRS says it updates the list by the 15th day of the first month of each quarter; the copy posted on October 24 still carried the August date, so check the date printed on the list when you use it. The IRS also posts short lists of entities whose certification it has suspended or revoked. If a PEO you are considering appears on one, ask it why.
• Accreditation is a separate, private program. It is run by ESAC, the Employer Services Assurance Corporation, which PEOs apply to. Its state-by-state lists named 40 different providers when we counted them. More in our guide to ESAC accreditation.

How big the industry is

The 5.4 million people paid through PEOs earned $386 billion in wages in 2025. NAPEO puts industry revenue at "an estimated $446 billion." NAPEO works that figure out from the wages, so it includes the paychecks PEOs run for their clients, not just the fees PEOs keep. That is why it is bigger than the wage total.

The average PEO client has 23.2 worksite employees. NAPEO estimates that about 14% of US businesses with 20 to 499 employees use a PEO, "roughly one in seven." That estimate covers only that size range.

Growth has been steady. NAPEO estimates the number of people paid through PEOs rose from roughly 1.6 million in 2008 to 5.4 million in 2025, about 7.2% a year, against 0.7% a year for all US jobs.

Fewer PEOs, bigger PEOs

Between 2022 and 2025, the number of PEOs fell about 1% a year. Over the same years, the people they serve grew 6% a year, client businesses 4% a year, and wages and revenue 8% a year. NAPEO's authors describe an industry "consolidating while continuing to expand."

The largest PEOs hold a growing share. The 5 largest serve an estimated 37% of all worksite employees, the next 25 serve 27%, and the remaining 472 serve 36%. The 30 largest went from 58% of the total in 2022 to 64% in 2025. NAPEO does not name the largest five.

What size are PEO clients?

Most PEO clients are small. NAPEO's estimate of how clients split by size:

Adding up the first four rows, about 87% of PEO clients have fewer than 50 employees. So a company of 15 or 40 people is a typical PEO client, not an unusual one. Some PEOs set a minimum size, though: see minimum employees for a PEO and who uses a PEO.

What the count means when you shop

A field of about 500 sounds like a lot to sort through. In practice it is concentrated: a few very large PEOs and hundreds of small ones. Size alone doesn't tell you which will suit you.

Three checks matter more than the headline count:

• IRS certification. Ask the PEO for the legal name on its contract, then look for that name on the IRS list. See certified vs non-certified PEOs.
• ESAC accreditation. A separate, private program. Our ESAC guide explains what it checks.
• State licensing. Many states require PEOs to register or hold a license. See PEO licensing by state and PEO state registration.

You can browse the PEOIQ directory, which lists 200+ providers. If you would rather have help narrowing the field, we can connect you with our independent broker, a separate business that gathers quotes from several PEOs. Request a Consultation through our PEO quotes page. It takes several business days, because the broker gathers quotes on your actual employee list. The consultation is free to you. If you sign through the broker, he shares part of his fee with us.

Common questions

Is every PEO certified by the IRS?

No. Certification is a voluntary program. The IRS list has 122 active entries, while NAPEO counts about 500 PEOs, and many IRS entries belong to the same few companies.

Why does the IRS list show several names for one company?

Each name is a separate legal entity, and each one is certified on its own. On the August 7, 2026 list, ADP TotalSource accounts for 18 entries.

How many people work through PEOs?

About 5.4 million at the end of 2025, at 233,000 client businesses.

Is the number of PEOs growing?

No. It fell about 1% a year from 2022 to 2025, from 523 to 502, while the number of people PEOs serve grew about 6% a year.

Sources

• NAPEO and McBassi & Company, "PEO Industry Footprint 2026" (data as of end of 2025)
• NAPEO and McBassi & Company, "The PEO Industry Footprint: 2023" (data as of end of 2022)
• NAPEO, Industry Research & Data
• IRS, list of active certified professional employer organizations (report date August 7, 2026)
• IRS, list of suspended certified professional employer organizations (report date April 15, 2026)
• IRS, list of revoked certified professional employer organizations
• IRS, CPEO customers: what you need to know
• IRS, CPEO public listings (update schedule)
• IRS, Certified Professional Employer Organization
• ESAC, Find an Accredited PEO