Every employer juggles six jobs. A PEO puts them in one house.
Most small businesses piece these together: a payroll company here, a benefits broker there, a workers' comp agent, and the owner covering HR after hours.
You
You're the one connecting all six. When a law changes or a vendor drops the ball, it lands on your desk.
One login, one invoice, and one client advocate you can call, backed by payroll, benefits and HR specialists.
Payroll and taxes
Paychecks, tax filings, W-2s, state unemployment
Payroll companyHealth benefits
Medical, dental, vision, life, enrollment
Broker and carrierWorkers' comp
The policy, claims and safety
Insurance agent401(k)
Retirement plan and its paperwork
401(k) providerHR admin
Onboarding, handbook, time off, terminations
You, after hoursCompliance
When laws change, ACA, posters, new-hire forms
An hourly law firmPayroll and HR always come over. Health benefits, workers' comp and the 401(k) can stay where they are if that works out better.
You run the business. The PEO handles the employer paperwork.
This is called co-employment. The PEO becomes the employer of record for payroll, taxes and benefits. You stay the day-to-day employer.
You
The day-to-day employer- Hire and fire
- Set pay and hours
- Manage the work
- Set the culture
The PEO
The employer of record- Payroll and taxes
- Sponsors benefits
- Workers' comp
- HR and compliance
- Paid by
- The PEO, for your company
- W-2 issued by
- The PEO, under its tax ID
- Works for
- Your company, same as today
Your employees will see the PEO's name on their paycheck. Nothing else about their job changes.
You keep your own EIN (your tax ID) for your business taxes, bank and licenses. The PEO's EIN is used only for payroll taxes.
The risk is shared. If the PEO gives you HR advice and it turns out wrong, the PEO is on the hook too.
You can leave. Most agreements let either side end it with 30 days' notice. We read the agreement before you sign.
Your team joins a pool of 100,000 employees.
Alone, you buy insurance as a small group. Inside a PEO, the PEO negotiates for everyone in its pool at once. That's how a 12-person company can offer benefits like a Fortune 500 company.
On your own
12-person group
- Priced on your group alone
- Fewer plan choices
- Less pull with carriers
Inside a PEO
12 of 100,000
Each dot is one employee. Showing a slice of the pool.
on the PEO's master plan. You offer the 1 to 3 that fit.
Master plans with Aetna, Cigna, UnitedHealthcare and Blue Cross.
That's why the PEO asks for your employee list before it quotes.
One new line on the bill: the admin fee.
Everything else on a PEO invoice is something you already pay today. The question is whether what you save on the other lines covers the fee.
$75 to $150 per employee per month for most small companies. Covers payroll, HR, benefits admin and compliance, and replaces your payroll company.
Two real comparisons we've run
What decides it: do the savings cover the fee? Names removed, numbers rounded.
Saves $21,000 a year
About $400 a month more
How the math could work for a practice like yours
Wages and payroll taxes are the same either way. The comparison comes down to health coverage, the software and HR help a PEO replaces, and the PEO's admin fee.
Made-up example numbers, not a quote. Real numbers come from your employee list.
Per year, for the practice
Each bar is what the practice pays in a year for health coverage plus payroll and HR. The shorter bar wins.
Same either way in this example: wages, payroll taxes and workers' comp. In real quotes, workers' comp and state unemployment can move too.
1. Pick how the PEO quote comes in
2. Size up the practice
Also assumed: the practice pays 75% of premiums, and spends $300 a month today on payroll software and HR help that the PEO replaces.
Staff who drive between patients' homes need workers' comp set up for that work. In a PEO it usually sits on the PEO's policy.
A PEO doesn't carry medical malpractice. That policy stays where it is today.
PA local wage taxes depend on where each person lives and works. The PEO withholds and files them.
Nurses and nurse practitioners compare benefits when they choose a job. Big-company benefits help you hire and keep them.
Is a PEO a fit for you?
A PEO isn't right for everyone. Answer a few questions and see where you land. We'll tell you the same thing on a call, even after the quotes are in.
How many W-2 employees do you have?
Are you open to running payroll through the PEO?Payroll always moves to the PEO.
Do you offer health insurance, or want to?
Did your last renewal go up, or are benefits hard to afford?
Is HR or payroll eating your time, or does nobody own it?
Do you have employees in more than one state?A PEO handles each state's taxes and rules.
Example answers. Click to change them.
Strong fit
About two weeks to compare. About a month to switch.
Nothing you send us commits you to anything. You only sign with a PEO once you've seen the numbers side by side and picked one.
Intro call
PillarSend 4 documents
YouEvery PEO side by side
PillarPick one and sign
YouFirst payroll on the PEO
PEOAiming for January 1? Send the documents this week, see every PEO side by side before Thanksgiving, and pick one in early December. Each PEO sets its own cutoff for January 1 starts, usually in December.
The questions owners ask us most
Pulled from our recent calls with business owners.
Words you'll hear
Per employee per month. How most admin fees are priced.
A list of your employees with ages, ZIP codes and pay. PEOs need it to quote.
Client service agreement. Your contract with the PEO.
The PEO's large-group health plan that your team joins.
State unemployment tax. Some states bill it at the PEO's rate.
Insurance that protects you if an employee sues. Most PEOs include it.
A PEO certified by the IRS. It takes on the federal payroll tax responsibility.
The PEO's review of your group before it offers you a price.