Full-Service HR

Administrative Services Organization vs Professional Employer Organization

Ella Baker
Administrative Services Organization vs Professional Employer Organization
Reading time 5 Mins
Published on May 21
Share

Which type of service does your business need?

Administrative services organizations (ASOs) and professional employer organizations (PEOs) both offer human resources outsourcing services that can help your small or mid-size business continue to grow. By reducing the amount of time that you have to spend processing payroll or handling common human resources tasks, your outsourcing partner allows you to focus on your more immediate business needs. Determining which service is right for you is a critical first step in relieving some of the burden from your shoulders.

What is a PEO?

In the ever-changing world of human resources compliance, a PEO takes on the administrative function of an HR department and assumes much of the liability that would traditionally burden your business. Working through the co-employment relationship, a PEO shares the costs and risks of employment with client companies. This relationship makes the PEO the employer of record for tax purposes, removing much of the liability from your business in the eyes of the IRS and other government agencies. Through this arrangement, PEOs are able to provide:

  • HR Management
  • Benefits Administration
  • Payroll Processing
  • Time and Labor Management
  • Tax Administration
  • Better rates on Worker’s Compensation
  • Safety and Risk Management
  • Employee Relations Support
  • ACA Compliance
  • Labor Law Compliance

As the employer of record, your PEO is able to offer your employees access to world-class benefits that help you retain and attract top talent for your company. Working with a PEO is an investment in your business’ future, ensuring that you are able to provide your employees with the benefits they deserve while providing you with valuable time-saving and liability-reducing services.

What is an ASO?

ASOs are also able to provide administrative HR outsourcing options, including processing payroll, benefits administration, and assistance with ensuring regulatory compliance. It is important to note that, unlike a PEO, an ASO does not fall under a co-employment agreement, thus client companies retain all employment-related risks and liabilities.
An ASO can assist you in selecting and securing benefits for your employees, allowing you to carve out your own benefits plan. Since ASOs don’t act as the employer of record, client companies do not have access to the bulk discounts offered by PEOs.

What’s the difference in responsibility?

There are several key differences in the level of responsibility of each type of HR outsourcing organization in relation to your company. Determining the services and responsibility that your company needs to succeed is vital in deciding which type of organization is the right choice for you.

[fusion_table]

ResponsibilityASOPEO
Who is the Employer of Record?Client is the employer of record.PEO is the employer of record, allowing them to share employment-related risks.
Human Resources AdministrationHuman resource responsibilities are supported by ASO, but client is responsible for following proper HR policies compliant with laws and regulations.Human resource responsibilities are supported by PEO, but client is responsible for following proper HR policies compliant with laws and regulations.
Workers’ Compensation CoverageClient selects and provides own coverage at market rates.Coverage provided under PEOs master policy at rates negotiated by the PEO.
Employee Benefits and AdministrationCoverage obtained by client or obtained through ASO. ASO can offer assistance with administration.Coverage can be offered under PEO master policies or client may choose to use own policy. PEO administers the plans.
Risk and Safety ManagementProvides safety program support but cannot provide claims management.PEO administers claims management and safety program compliance.
Payroll Tax LiabilityThe employer maintains all payroll tax liability.The PEO is liable for federal taxes. State rules vary.
Regulatory ComplianceASO manages responsibilities related to regulatory compliance.PEO manages responsibilities related to regulatory compliance.
Unemployment ClaimsClient or ASO can manage unemployment claims.PEO manages unemployment claims.

[/fusion_table]

Which is right for your company?

While both models offer valuable assistance and support for your company, the decision ultimately comes down to what level of service your company needs. If you’re a growing small or mid-size business owner with relatively little HR experience, a PEO like Sheakley may be the right choice for you.

The co-employment arrangement between your company and Sheakley leaves you in charge of
your staff. While Sheakley’s pre-employment services help you to navigate talent acquisition and
management, you maintain control of your staff, their assignments, and pay rates.

Ensuring effective daily management of your employees allows you to keep your most talented
employees. Sheakley provides practical information on HR practices and policies, legal
compliance and employment regulations. Meanwhile, the post-employment solutions offered by
the Sheakley PEO team provide termination compliance and save your business money by
combatting unemployment.

Learn more about Sheakley’s PEO team and contact us for your free consultation today. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media. Join in the discussion by commenting below.


You may want to read

See all articles
X
X
X
X