PEO vs ASO
Two different HR outsourcing models — understanding the difference helps you choose the right structure for your business.
Side-by-side comparison
| Feature | PEO | ASO |
|---|---|---|
| Employment relationship | Co-employment — PEO is employer of record | No co-employment — you remain sole employer |
| Payroll taxes | Filed under PEO federal EIN | Filed under your own EIN |
| Benefits access | PEO group rates — large pool buying power | Your own benefits or brokered plans |
| Workers comp | Covered under PEO master policy | Your own policy, admin only |
| Compliance liability | Shared between you and PEO | Stays with your business |
| HR support | Dedicated HR team included | Consulting available, typically extra cost |
| CPEO certification | Available — provides tax advantages | Not applicable |
| Cost structure | $100-$200/employee/month or % of payroll | Typically lower — admin fee only |
| Best for | Businesses wanting full HR outsourcing | Businesses wanting admin help, keeping control |
What is a PEO?
A Professional Employer Organization enters into a co-employment arrangement with your business. Your employees are jointly employed by both you and the PEO, which allows the PEO to provide benefits under their own large-group plans, file payroll taxes under their federal employer identification number, and carry workers compensation under their master policy.
This arrangement gives small businesses access to Fortune 500-level benefits and deep HR expertise while sharing certain employer-related liabilities with the PEO.
What is an ASO?
An Administrative Services Organization provides HR administrative services without co-employment. You remain the sole employer of record. The ASO handles tasks like payroll processing, benefits administration, and HR software — but under your own EIN, your own benefits contracts, and your own workers compensation policy.
ASOs are a good fit for businesses that want administrative help but prefer to maintain full employer status, already have strong benefit plans they are happy with, or operate in industries where co-employment creates complications.
Which is right for your business?
- Want access to large-group benefits rates
- Need to share compliance liability
- Have fewer than 100 employees
- Want a dedicated HR team
- Are growing quickly and need scalable HR
- Want workers comp under a master policy
- Already have competitive benefits in place
- Want to stay sole employer of record
- Have a larger or more mature HR function
- Prefer your own workers comp policy
- Need admin help but not co-employment
- Operate in a sector sensitive to co-employment