A professional employer organization is a comprehensive HR outsourcing service that takes on certain administrative responsibilities from employers. Unlike dedicated payroll outsourcing services or administrative services organizations, a PEO can provide access to employee benefits at a lower cost than would otherwise be possible for small- and medium-sized businesses. At the same time, PEOs are the only HR outsourcing solution that can both process and file payroll taxes [LINK TO: payroll tax filing services landing page] for you.

This is made possible through a client service agreement (CSA) or service level agreement (SLA) that splits administrative responsibilities between the PEO and the client. You maintain control over day-to-day worksite functions like hiring and firing while the PEO is designated as an administrative employer for tax purposes. This agreement is referred to as “co-employment” because payroll taxes are filed under the PEO’s Federal Employer Identification Number (FEIN) rather than your business’ FEIN.