PEOs, known as professional employer organization, is also referred to as employee leasing companies. PEO services are outsourcing firms that provide services to small or medium-sized businesses. A PEO company will help a company with managing payroll, human resources, and other administrative functions.

PEO companies subcontract the employees of your business, so employees have two employers, you, the small business owner, which is in charge of the day to day functions and assignment of tasks, and the PEO company, which will take care of HR-related services. Included in the human resource-related services are consulting safety and risk mitigation, workforce management, training, and development.

How Does it Work?

The PEO will work with you through co-employment. Co-employment is a contract sharing specific employer responsibilities between your business and the PEO company. Through sharing responsibilities, your business will be able to leverage the help a PEO can provide. So, the PEO company will handle payroll administration, tax filing, and HR support. You will be responsible for the day to day operations of your business. If you’re looking into a PEO, you can review PEO companies on retireat21.

To fully understand what a PEO company does, listed below are items that a PEO service can help your business with:


Payroll is an essential and complex part of the administration, and PEO companies can help administrators with organizing full-time and part-time employees, both salaried and hourly, vendors, and contractors payroll payments. PEOs help set up automatic deposits and payroll administration.

Compliance Support

If there are ever employer-related compliance issues, a PEO company will support business with items that include payroll taxes, employee tax forms, and reporting forms. Other support that PEO companies offer a business they are contract with is reporting new hires, workers compensation, employment liability insurance, and unemployment insurance filings.

Read More: Outsourcing for Small Businesses is a Growing Trend


A small company, usually can’t offer its employees benefit plans. But, by being in contract with a  PEO company, your business has access to medical, dental, and vision benefits for your employees at a negotiable rate. A PEO company will also help with benefit administration, such as onboarding benefits, claims, and other benefits.

Additional Assistance

There are other perks for small business owners that work with a PEO company, such as discounted gym membership. Any additional benefits that a PEO company provides are aimed to help your business develop a happy and healthy team of employees.

Getting into Business with a PEO

Here is where you can understand what a PEO company does and how they help small businesses. There are many benefits PEOs bring to your business like cost-saving employee benefits, cost savings through hiring, protection against risk, and freeing up hours in your day.


Having extra money to hire administration specialists might not be in your budget, but by partnering with a PEO company, they save you from that worry. That’s because they will oversee administrative or human resource items such as employment-related paperwork to save you the trouble.

Cost Savings

Partnering with a PEO company is a substantial cost savings for you, and opens up doors to provide your employees opportunities you wouldn’t be able to on your own. With a PEO company, your employees are grouped with other PEO co-employees that form a large group, which is why, with a PEO, you can provide employees access to health and dental coverage at competitive rates.

Final Thoughts

A PEO company helps with human resources, compliance, payroll, risk mitigation, and lots more. Going into a contract with a PEO company can help you with specific business administration and improving your work environment by having the ability to provide employees with benefits. Usually, clients of PEO companies are smaller businesses with 19 employees. If you are a smaller business, and struggling with the administrative side of your business, then looking into a PEO service is something you should consider.


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