PEOs deliver the most value for:

• Small to mid-sized businesses (5-500 employees) who need professional HR infrastructure but can’t justify the cost of a full internal HR department.
• Fast-growing companies adding employees quickly who need scalable HR systems without the time and expense of building internal capacity.
• High-compliance industries like construction, healthcare, or manufacturing where regulatory requirements demand specialized expertise.
• Businesses frustrated with benefits costs who can leverage the PEO’s larger group purchasing power to offer better insurance at lower rates.
• Multi-state operations that need help managing different state employment laws, tax requirements, and compliance standards.
• Owners who want to focus on their business instead of HR paperwork, compliance updates, and administrative tasks.

PEOs typically don’t make sense for very small businesses (under 5 employees), companies with established and efficient in-house HR teams, or organizations requiring highly specialized or customized benefits programs.

Not sure if a PEO is right for you? We analyze your current HR costs, compliance risks, and growth plans to give you an objective recommendation—even if that means a PEO isn’t the best fit for your situation.

PEO pricing follows two main models:

Percentage of payroll: Typically 2-12% of gross payroll, with most businesses paying 3-8%. Smaller companies usually see higher percentages.

Per-employee-per-month (PEPM): $40-$200+ per employee monthly, varying based on:

• Your employee count (more employees = lower per-employee rates)
• Services you need
• Your industry and risk profile
• Your location
• Benefits selections

Real-world examples:

• A 10-employee company with $500K annual payroll: $15,000-$40,000 annually in PEO fees
• A 50-employee company with $2.5M annual payroll: $75,000-$150,000 annually in PEO fees
• Important: These fees cover PEO services only. The actual cost of benefits (health insurance premiums, etc.) is additional and passed through at the rates the PEO secures.

We help you get accurate quotes and compare them against your current HR costs to see the real impact on your bottom line.

PEOs operate on transparent revenue models:

• Service fees – Most charge either a percentage of total payroll (typically 2-12%) or a flat per-employee-per-month fee ranging from $40-$200+ based on the services you need.
• Benefits administration – While PEOs negotiate better group insurance rates due to their larger employee pools, there’s typically a markup when those costs are passed to clients.
• Workers’ compensation premiums – PEOs secure volume discounts with insurance carriers and may include a margin in what you pay.
• Operational efficiency – By serving multiple clients through shared technology and standardized processes, PEOs achieve economies of scale that make their fee structure sustainable.
• Interest on float – Brief holds on payroll funds between funding and distribution can generate modest interest income.

While there isn’t one standard classification system, PEOs differ in several important ways:

By certification status:

• Certified PEOs (CPEOs) have earned IRS certification by meeting specific financial and operational standards
• Non-certified PEOs provide similar services but haven’t pursued CPEO status

By service approach:

• Full-service PEOs offer comprehensive HR outsourcing including payroll, benefits, compliance, and risk management
• Administrative Service Organizations (ASOs) provide similar services without the co-employment relationship

By client size:

• Small business PEOs specialize in companies with 5-50 employees
• Mid-market PEOs focus on businesses with 50-500 employees
• Enterprise PEOs serve organizations with 500+ employees

A Professional Employer Organization (PEO) handles your HR heavy lifting through a co-employment partnership. When you work with a PEO, you get:

• Payroll processing and tax administration – We manage employee paychecks, tax withholdings, and all quarterly and annual tax filings so you don’t have to worry about IRS deadlines or penalties
• Employee benefits administration – Your team gains access to enterprise-level health insurance, retirement plans, and benefits packages that small businesses typically can’t access on their own
• Workers’ compensation insurance – Complete coverage and claims management to protect your business and employees
• HR compliance support – Expert guidance navigating federal and state employment laws including FMLA, ADA, and OSHA requirements
• Risk management – Workplace safety programs and unemployment claims administration that reduce your liability
• HR technology platforms – Modern software for time tracking, benefits enrollment, and employee self-service that your team can access 24/7

The specific services depend on your business needs and the plan that makes sense for your situation.