Payroll

What Is a PEO?

A PEO (Professional Employer Organization) is an organization that has a co-employer relationship with a business. PEOs typically pay the employees and file and pay payroll taxes for a business using the PEO’s own EIN and tax IDs (reporting rules vary by state). They may also handle insurance for a business, such as health benefits and workers’ compensation plans.

An ASO (Administrative Services Organization) is an organization that you use to outsource your payroll (and/or other HR and insurance needs). They would use your company’s own FEIN and tax IDs to file your taxes. They would not have a co-employer relationship with your business.

Looking to switch from a PEO to Gusto? Learn more here.

This article provides general information and shouldn’t be construed as tax advice. Since tax rules may change over time and can vary by location and industry, please consult a CPA or tax advisor for advice specific to your business.