Payroll vs. PEO Services

Consider if a Professional Employer Organization (PEO) or another payroll service provider
is the best suitable for your company’s needs. Continue reading as we examine the
distinctions between the two and analyse the circumstances in which you might select one
over the other.

What is a payroll provider?

A payroll service provider is a third-party organisation contracted to manage a company’s
payroll. In addition to providing payroll checks or direct deposits, payroll service providers
often transmit tax payments to the proper state and federal tax authorities. PEO service
providers may supply timekeeping solutions and track PTO benefits for the purpose of
accumulating hours to be sent to payroll (such as time off, sick time, or vacation leave).

While the role, as mentioned earlier, of a PEO payroll provider is legitimate, several of
these businesses have begun to diversify their services. To attract (or retain) consumers,
numerous businesses provide HR services, access to benefits, and other amenities. Even a
small number of insurance brokers provide HR services! Payroll service providers include
well-known companies such as ADP and Paychex, in addition to a vast array of small or
regional options. Finding payroll service providers is straightforward.

Use Examples For Payroll Services

It would be best if you only used a payroll provider when you needed help handling and
processing payroll. For example, if you run a small or medium-sized business with multiple
part-time employees (who do not get benefits), you may need a system to track hours and
make timely payments.

What precisely is a professional employer organisation (PEO)?

With a Professional Employer Organization (PEO), you may share employment
responsibilities, outsource many of your human resource functions, such as payroll, and
frequently take advantage of economies of scale to offer more incredible benefits for your
employees. A PEO helps with your company’s management when addressing complex
employee-related concerns. Moreover, it provides a technical platform for handling all of your
personnel information.

PEOs’ Use Cases

PEOs may benefit businesses of all sizes, whether they have five employees or more!
Typically, companies that use PEOs fall into one of the following categories:

● They are looking for a single partner to serve as their point of contact for all human
resources-related problems, including payroll, benefits, technology, and compliance. This
might be because they are too busy developing the business to undertake these tasks
themselves or because they do not feel comfortable performing them themselves and would
rather have a professional handle them.
● They want access to premium, all-inclusive benefits packages that will attract and retain
the best talent in a competitive labour market. As opposed to payroll vendors, PEO payroll
providers may accomplish this.
● They prioritise growth. People select PEOs over payroll services because, as their
businesses grow, they need more than just payroll help. During a company’s growth phases,
all aspects of management become more complex. They are aware that they need support
to conform to all HR rules and industry best practices.
● They recognise their lack of HR competence. Companies that partner with PEO payroll
providers want qualified personnel that can assist them in difficult situations.


Unless you just want payroll processing, PEO payroll providers are a superior alternative
for your small or medium-sized business. Their primary area of expertise is payroll
processing, and although they may expand into other industries, they are not structured to
be generalists like PEOs.

Payroll processors are not employees like PEOs; thus, they are not as invested in the
success of your business as PEO service providers would be.


Source URL: https://www.atoallinks.com/2022/payroll-vs-peo-services/


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