A payroll service provider focuses exclusively on payroll processing. Their job is to help you pay your employees correctly and on time. They calculate wages, deduct taxes, withhold benefits, file the appropriate tax forms, and often offer direct deposit services.

Some of the more advanced providers also handle W-2 and 1099 forms, track PTO, and integrate with accounting software. They may even offer an online portal for employees to access pay stubs and tax documents.

But here’s the key: you remain the legal employer and the primary administrator of your HR operations. Payroll services do not take over responsibilities like compliance, workers’ comp, benefits management, or employee onboarding.

A PEO acts as a co-employer, taking on many of the responsibilities typically handled by an internal HR department. In a co-employment relationship, your business continues to manage daily operations while the PEO becomes the official employer of record for tax and benefits purposes.

This means the PEO handles payroll, tax filings, benefits administration, workers’ compensation coverage, onboarding, and compliance. Employees technically appear on the PEO’s books, though all management decisions remain in your hands.

PEOs for small to midsize businesses offer the stability and support of a fully developed HR infrastructure without hiring a large internal team.

A PEO is a third-party partner that manages a broad range of administrative and human resource functions. These typically include payroll, benefits administration, workers’ compensation, onboarding, regulatory compliance, and HR support. When a startup joins forces with a PEO, they enter a co-employment relationship. This means the PEO becomes the employer of record for tax and insurance purposes, while the business owner retains control over day-to-day operations and hiring decisions.

While that may sound technical, the real benefit lies in the freedom this model gives entrepreneurs to focus on their core mission, rather than getting lost in paperwork, policy manuals, and tax filings.

A payroll service is a third-party provider that helps businesses manage their payroll functions. This service handles everything from calculating employee wages and deductions to filing taxes and distributing payments. Essentially, payroll services take care of the administrative aspects of payroll so that business owners and HR teams can focus on running the business.

Most payroll services offer comprehensive packages that include payroll processing, tax filings, compliance management, and reporting. These services are valuable for small to midsize businesses that don’t have the internal resources to manage payroll efficiently and accurately.

Some payroll service providers offer additional HR support, benefits administration, time tracking, and employee self-service portals.

While providers may offer slightly different packages, most payroll services encompass the following:

• Payroll Processing: This includes calculating employee wages, deductions (taxes, retirement contributions, etc.), and issuing payments via direct deposit or checks.
• Tax Filing: Payroll management services handle federal, state, and local tax filings. This includes withholding taxes from employee paychecks, submitting payments to the appropriate tax authorities, and ensuring compliance with tax laws.
• Employee Benefits Administration: Some payroll services offer the management of employee benefits, such as health insurance, retirement savings plans, and other perks.
• Compliance Assistance: Payroll services make sure businesses are compliant with labor laws, tax regulations, and other legal requirements. This can include filing reports for tax purposes and assisting with audits.
• Reporting: Most payroll services generate reports on employee hours worked, wages paid, tax deductions, and other relevant data. These reports are essential for tracking business expenses and managing tax filings.

Depending on the provider and package, you may also have access to additional features, such as HR support, time tracking, and employee self-service portals.

There are several reasons companies choose to leave their current PEO:

• Cost Considerations: A business may find that its current PEO is no longer offering competitive pricing for the services provided. PEOs typically charge a percentage of your payroll, and this cost can increase as your company grows. If the cost outweighs the benefits, a new PEO with a better pricing structure might make sense.
• Service Level Issues: PEOs are responsible for a wide range of HR tasks, and when service levels drop, businesses may look for a provider that offers higher-quality customer service or more tailored support. Poor customer service, responsiveness issues, or a lack of expertise in your industry can prompt businesses to switch providers.
• Limited Services: As your business evolves, you may find that your current PEO doesn’t offer the full range of services you need. Be it more comprehensive employee benefits, advanced technology, or HR management solutions, a new PEO may provide more relevant solutions.
• Cultural Misalignment: If the PEO’s work culture or management style does not align with your company’s needs or values, this misalignment can hinder your business growth. A PEO that understands and supports your company’s culture can provide better HR solutions and improve employee satisfaction.
• Regulatory Compliance: Some PEOs might struggle with maintaining compliance across various state or federal regulations. If compliance and risk management become an issue, switching to a more capable PEO provider is an important move.

Whatever the reason, leaving a PEO is a significant step, and businesses must carefully weigh the advantages and disadvantages before deciding to make the change. Once that decision is made, the transition must be executed properly to avoid business disruptions.

An Administrative Services Organization (ASO) offers outsourced administrative support for HR-related functions such as payroll, benefits administration, and compliance management. However, unlike a PEO, an ASO does not assume responsibility for the employer-employee relationship. Instead, the ASO works on a fee-for-service basis and handles specific administrative tasks, while your business retains full control over its workforce.

ASOs are typically hired by businesses that want to outsource certain HR functions but still wish to manage their employees independently. ASOs do not become co-employers, and your business remains the sole employer. Instead, ASOs offer the following services:

• Payroll Processing: ASOs handle payroll management, ensuring that employees are paid on time and that taxes are filed accurately.
• Benefits Administration: ASOs help manage employee benefits such as health insurance, retirement plans, and other perks, but your company remains responsible for offering and overseeing these benefits.
• Compliance Support: ASOs help your business stay in compliance with federal, state, and local labor laws. This includes ensuring tax filings are completed, benefits are administered correctly, and reporting requirements are met.
• HR Consulting: Some ASOs offer HR consulting services to help businesses with areas such as employee relations, performance management, and training.

ASOs generally offer flexibility, allowing businesses to pick and choose which HR services they want to outsource. However, unlike a PEO, ASOs do not provide access to a broader employee benefits package, and businesses must still handle employment-related risks, such as workers’ compensation and insurance coverage, independently.

A PEO broker is a professional who helps businesses find and connect with Professional Employer Organizations (PEOs). These brokers act as intermediaries, assisting companies in selecting the best PEO features and services for their specific needs. They evaluate your business’s size, industry, and objectives before recommending a PEO that aligns with your company’s requirements.

PEOs offer a range of outsourced HR services, including payroll processing, employee benefits administration, workers’ compensation insurance, compliance management, and more. By partnering with a PEO, businesses can delegate many of their HR responsibilities to an external provider, which reduces administrative burden and mitigates the risks associated with employee management.

A PEO broker doesn’t work for a single PEO but has a network of PEO providers that they work with, ensuring a diverse selection of options. They match your business with the right provider based on your needs, saving you the time and effort of researching different companies.

Onboarding software is a digital platform or system designed to help businesses streamline and automate employee onboarding. This software aids in the management of paperwork, employee training, and compliance procedures while providing a central location for all necessary documents and information needed to get new hires up to speed.

Starting from the acceptance of an offer letter to the completion of all training and administrative requirements, onboarding software is a tool that centralizes every step of the onboarding process. The platform helps new hires feel more connected to the company, which is vital to employee engagement and retention. For HR teams, it makes managing and processing new employee details simpler, as everything is available digitally in one place.

The transition to paperless onboarding isn’t just about reducing paper consumption; it offers many advantages that can improve both the employer and employee experience.

• Efficiency: Paperless onboarding significantly reduces the time it takes to complete new hire paperwork. With digital forms, everything can be filled out and signed electronically, saving both time and effort.
• Accuracy: By using electronic forms, errors are reduced. For example, digital forms can have validation checks to ensure that the required information is provided correctly.
• Convenience: New hires can complete their forms and training modules from any device. They can start the process before their first day or during breaks without waiting for someone to hand them paperwork.
• Compliance: Onboarding software can be designed to keep businesses in compliance with legal requirements, such as tax forms, non-disclosure agreements, and other necessary documentation.
• Cost-Effective: By reducing the need for paper, ink, and physical storage space, businesses can save on both material costs and storage space.