Managing human resources is an essential function for any company that has employees. Companies have two main options when looking to outsource human resources: Professional Employer Organization (PEO) and Human Resources Outsourcing (HRO).  

What is a PEO?  

A Professional Employer Organization (PEO) acts as a co-employer that provides various services for businesses. These services include payroll, employee benefits, safety training, compliance issues, and employee onboarding.   

PEOs are beneficial for small businesses because they allow employers to focus on growing their company rather than spend time managing employee-related responsibilities.  

Employers often spend a lot of their time on administrative duties such as payroll, taxes, and employee paperwork, but partnering with a PEO takes those responsibilities off employers’ hands. This allows employers to spend more time engaging with their employees and focusing on the growth of their business while a PEO focuses on the more tedious tasks. 

Additionally, PEOs are often able to provide various benefits at affordable costs that some small businesses would not be able to access otherwise due to the co-employment relationship. These benefits may include:  

  • Health insurance 
  • Dental care
  • Life insurance
  • Vision care
  • Long- and short-term disability
  • 401(k)  

What is an HRO?  

Human Resources Outsourcing (HRO) is an independent third-party company that supports the human resource needs of a business. HRO provides services such as payroll, policy creation, and employee benefits.  

A HRO company provides a variety of services from basic HR functions to more detailed HR management.  

Differences between PEO and HRO services 

One of the major differences between a PEO and HRO is that a PEO is a co-employer, while a HRO company is a third-party provider that a business would hire.  

There are two major benefits to the co-employment relationship. First, as a co-employer, a PEO has a shared liability when it comes to accurate payroll and tax filings. Second, due to the co-employment relationship, PEOs are often able to give small businesses access to more benefits options at an affordable price. PEOs are also able to provide valuable workers’ compensation and employee safety solutions at a discount. 

Choosing between a PEO and HRO service 

PEOs and HROs are both popular options for businesses that are looking to outsource human resources services, so it is important to look into both options to decide which is best for your company.  

If you are looking for an outsourced HR company that will provide your employees with benefits, then a PEO is the best option.  

If your company is looking for outsource human resources services, it is important to research both PEOs and HROs to decide which is best for your company.  

If you have any questions regarding PEO services, reach out to us at marketing@helpside.com.