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What is a PEO?P.E.O. stands for professional employer organization

A PEO takes on the employer paperwork for a small business: payroll, taxes, benefits, workers' comp and HR. Your team joins the PEO's much bigger pool, so you can offer big-company benefits and get your time back. You still run your business.

A walkthrough from Contemporary Benefits Advisors

1

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.

6vendors 6bills 6logins

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.

10 to 15hours a week a PEO can free up for a small-business owner
Back to the businessTime on people, not paper
Six jobs, six different places The PEO one house

Payroll and taxes

Paychecks, tax filings, W-2s, state unemployment

Payroll company

Health benefits

Medical, dental, vision, life, enrollment

Broker and carrier

Workers' comp

The policy, claims and safety

Insurance agent

401(k)

Retirement plan and its paperwork

401(k) provider

HR admin

Onboarding, handbook, time off, terminations

You, after hours

Compliance

When laws change, ACA, posters, new-hire forms

An hourly law firm

Payroll and HR always come over. Health benefits, workers' comp and the 401(k) can stay where they are if that works out better.

2

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.

Pay stubExample
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.

1

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.

2

The risk is shared. If the PEO gives you HR advice and it turns out wrong, the PEO is on the hook too.

3

You can leave. Most agreements let either side end it with 30 days' notice. We read the agreement before you sign.

4

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.

What's on a PEO invoicepulled each payroll
WagesSame as today
Payroll taxesSame as today
Health benefitsOften lower
Workers' compOften lower
PEO admin feeThe new line

$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.

A home runTech company, about 10 employees

Saves $21,000 a year

An investmentSmall medical practice

About $400 a month more

Saves moneyAdds costBars on one scale, per year
5

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

    6

    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.

    Day 1

    Intro call

    CBA
    Under an hour

    Send 4 documents

    You
    About 2 weeks

    Every PEO side by side

    CBA
    When you're ready

    Pick one and sign

    You
    About a month later

    First payroll on the PEO

    PEO

    Best to start about 120 days before your health renewal. Switching mid-year is fine too.

    7

    The questions owners ask us most

    Pulled from our recent calls with business owners.

    Words you'll hear

    PEPM

    Per employee per month. How most admin fees are priced.

    Census

    A list of your employees with ages, ZIP codes and pay. PEOs need it to quote.

    CSA

    Client service agreement. Your contract with the PEO.

    Master plan

    The PEO's large-group health plan that your team joins.

    SUTA

    State unemployment tax. Some states bill it at the PEO's rate.

    EPLI

    Insurance that protects you if an employee sues. Most PEOs include it.

    CPEO

    A PEO certified by the IRS. It takes on the federal payroll tax responsibility.

    Underwriting

    The PEO's review of your group before it offers you a price.