An ASO is an administrative services organisation: a provider that runs your HR and payroll administration while you remain the sole employer of your staff. It is the arrangement people reach for when a professional employer organisation sounds like more than they want, and the single difference between the two decides almost everything else about the deal.
The one difference that drives all the others
An ASO does not co-employ. Your employees remain yours alone, their employment taxes are filed under your own identification number, and your benefits stay your benefits. A PEO does co-employ, files under its identification number and brings your staff onto its plans. Everything else people list as a difference follows from that: who holds the health plan, whose workers' compensation policy covers the work, whose experience rating moves, and who is liable if a deposit is missed.
When an ASO is the better answer
It fits an employer who already has benefits they are happy with, or who is large enough to buy decent group cover on their own account, and whose problem is purely administrative load. It also fits anyone who does not want a third party appearing as an employer on their staff's paperwork, which some owners mind more than they expect to. And it is usually cheaper, because you are buying labour rather than access to a benefits pool.
When it is the worse one
If the reason you are looking is that your health plan is expensive or thin, an ASO cannot help: it administers whatever you already have. That is the case a PEO exists for, and choosing an ASO to avoid the complexity of co-employment while hoping for better benefits is choosing the wrong instrument. Decide what you are actually buying first, because the two are sold by the same salespeople in the same conversation.
Questions people ask about what is aso
What does ASO stand for?
Administrative services organisation: a provider that runs HR and payroll administration for an employer without becoming a co-employer of the staff.
What is the difference between an ASO and a PEO?
Co-employment. An ASO leaves you the sole employer with your own tax identification number and your own benefits; a PEO becomes an administrative employer, files under its own number and provides the benefits. That difference decides liability, benefits buying power and price.
Is an ASO cheaper than a PEO?
Usually, because you are buying administration rather than access to a large benefits pool. Whether it is better value depends on whether benefits are the reason you are shopping at all.