Choosing a professional employer organisation is really choosing it over three alternatives, and the case is different against each. Against a payroll platform, against an HR outsourcing firm, and against hiring somebody internally. This page takes them one at a time, because the honest answer changes.
Against a payroll platform
The platform wins on price and loses on benefits. If your reason for looking is the pay run and the filings, the platform is cheaper by a wide margin and you should take it. The PEO wins only when access to group benefits or workers' compensation is worth more to you than the difference, which for many small employers it genuinely is and for many others it is not.
Against an HR outsourcing firm
Both take the administration; only the PEO changes your legal position and your benefits buying power. If you already have benefits you are happy with, the outsourcing firm gives you the same relief without co-employment, usually for less. If your benefits are the problem, the outsourcing firm cannot help at all, because it administers whatever you already have.
Against hiring someone
Below about twenty people an internal hire is an under-occupied post and the PEO or a platform wins easily. Above about seventy-five the judgement work justifies a person, and the best answer is usually both: a provider for administration, a hire for the work that needs to know your people. The middle is genuinely close and depends on how much of your load is deadline work.
Questions people ask about why choose a peo
Why choose a PEO over payroll software?
Only if benefits or workers' compensation access is worth more than the price difference. For the pay run and the filings alone, a published-price platform is cheaper by a wide margin.
PEO or an HR outsourcing firm?
Both take the administration. The PEO additionally changes your legal position and gives access to its benefits. If your existing cover is fine, the outsourcing firm gives the same relief for less.
Should I hire someone instead?
Below about twenty people the role is under-occupied. Above about seventy-five, hire for the judgement work and keep a provider for the administration. The middle depends on how much of your load is deadline-driven.