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.Updated September 23, 2017