What’s a Professional Employer Organization (PEO)? It’s a company that partners with your small business to run the behind-the-scenes HR stuff so you can focus on customers, not paperwork.
How it works
It’s called co-employment: you keep control of your people and decisions; the PEO handles HR administration and official filings. Think of it like a shared backpack: yours has sales and service, theirs carries payroll and compliance.
When Ana’s 12-person bakery got busy, the PEO took over paychecks and benefits while she perfected the croissants.
What a PEO does
- Runs payroll and files payroll taxes
- Manages benefits (health, dental, 401(k))
- Handles workers’ comp coverage and claims support
- Keeps required compliance posters and policies up to date
Who does what
You hire, set pay rates, schedule shifts, coach the team, and protect your culture. The PEO processes payroll, administers benefits, tracks leave, helps with workers’ comp, and keeps HR paperwork clean and compliant.
Cost, simply
Most PEOs price in two ways: a per-employee monthly fee (typically $80–$250 per person) or a small percentage of payroll. You’ll also pay pass-through costs for benefits and insurance. In return, you get buying power and time back, no giant spreadsheets.
Next step
Curious if a PEO fits your business? Read: How a PEO Works
