The Best PEO Service Providers

If you have employees but don’t have internal human resources (HR) staff, you may find yourself at a crossroads, unable to manage your HR processes effectively. One solution is to partner with a professional employer organization (PEO). A PEO takes the place of an internal HR department by handling your payroll, employee benefits and other HR-related needs, via a co-employment model. PEO services can also be excellent resources for small businesses expanding into different states or countries that need help juggling laws and compliance issues.

This screenshot, taken from a demo we conducted with TriNet, is an example of what a PEO platform looks like. PEO software typically includes a left navigation bar with tabs for things like payroll, benefits, time tracking, people, integrations and settings. Source: TriNet

A professional employer organization, or PEO, is an HR service that operates through a co-employment model, which means your employees are on the PEO’s books but still fall under your management. PEOs manage functions like payroll, HR administration, employee benefits, risk management and regulatory compliance, workers’ compensation, and employee training and development for their client businesses. When you choose a PEO, make sure it can perform all of the HR functions you need and can scale with your business as it grows.

It is important to find a trustworthy and certified PEO, since the service will be deeply integrated with your company. PEOs can earn certain certifications and accreditations to demonstrate that they abide by best practices, meet strict financial guidelines, and comply with all employment laws and regulations. The ESAC, IRS and BBB all have accreditation programs for qualifying PEOs.

PEOs use two main pricing structures for small businesses: per-employee fees and percentages of total monthly payroll. These costs range from $40 to $160 per person, or from 3 to 12 percent of your monthly payroll, depending on the company and plan you choose.

You should also consider the contract lengths. Some PEOs offer short-term contracts, while others lock you into multi year deals. Here are some other important factors that affect the cost of your PEO service.

Plan Structure

Find the plan with the services that fit your business’s needs. For instance, some plans include employee onboarding, workers’ compensation support, payroll processing, and risk and compliance management. PEOs can offer one-size-fits-all solutions or tailored solutions based either on your industry or your company’s size.

Additional Fees

Throughout the research and sign-up process, be on the lookout for any additional fees you’ll have to pay. Many PEOs don’t mention additional fees until it’s time to sign the paperwork. Before you sign up, request a detailed breakdown of all pricing and fees in writing, and review line by line where your money will go. If a PEO service is not willing to provide this information, consider it a red flag.

Employee Minimums

Some PEOs require you to have a certain number of employees in order to use their services. This minimum is usually five employees. For many businesses, this is a nonissue, but if you run a very small or new company, your options for PEO support will be limited.

While PEO service offerings vary and individual providers may specialize or stand out in specific areas of HR, these are the key features that you will typically find in a well-rounded PEO service.

HR Administration

The primary function of a PEO is to take care of human resources so that business owners can focus on other duties. PEOs can provide as much or as little HR assistance as you need. They can manage HR tasks such as employee handbook and policy creation, employee onboarding and termination, unemployment assistance, and compliance reporting. Their features are typically accessible through intuitive online platforms and mobile-friendly applications. PEO platforms make it easy to access all of your HR functions in one place.

Payroll Processing

One major function of most PEOs is payroll processing. Since your employees are on the PEO’s books, the PEO tracks their time and attendance, including hours worked, paid time off, sick time and vacation days. The PEO not only tracks employee time and attendance but also helps to prepare and issue their paychecks. It can also process employee liens and garnishments if necessary.

Many PEOs also manage and report your quarterly and year-end state and federal deposits and filings. A PEO taking care of your payroll can save you a lot of time and money. A reputable PEO will always pay your employees accurately and on time, which could improve your company culture if payroll has been hard to manage in-house.

We like that PEOs like Justworks make it easy to manage worker payments. Source: Justworks

Risk and Compliance

PEOs are usually well versed in the laws and regulations that your company has to follow, so they can help you manage risk and legal compliance for your business. This service is especially beneficial if you operate in multiple states or regions with varying employment laws. PEOs can help your business comply with the Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act (HIPAA), and the Occupational Safety and Health Administration (OSHA). In some cases, they can conduct employee accident investigations and perform onsite safety inspections and job hazard analysis.

Employee Benefits

Since PEOs have so many employees on their books, they have access to affordable, desirable employee benefits, including medical, dental, vision and life insurance. Some even offer health savings accounts, flexible spending accounts and health reimbursement arrangements. They often provide long- and short-term disability insurance, employee assistance programs, and retirement options like 401(k) plans. Many PEOs offer a wide selection of fringe benefits too, such as commuter reimbursement programs and parking discounts.

Workplace Training and Employee Development

Most PEOs offer standard workplace training on topics like sexual harassment and discrimination. Many of them provide additional onsite and virtual training on leadership, communication, workplace technology, recruitment, disciplinary actions and social media. Some even offer industry-specific training. This access to employee training and development materials can help your team grow and advance their skills. PEOs that offer training and development often have an online platform to track and report employee course results.

Finding a PEO is not as difficult as you may think. The first step of any business purchase decision is to assess your business’s needs so you can find companies that can help you solve those problems. Once you compare your top choices’ pricing, features and contracts, you should be able to decide which one is best for your business.

We interviewed some small business owners and managers to better understand what the decision process is like for SMBs interested in partnering with a PEO. While your buying decisions will be unique to your company’s needs, here are a few basic steps to finding the right PEO for your company.

1. Reviewing the Technology

When Max Prokell, founder of Venta Marketing, was choosing a PEO for his marketing team of 15 employees, he looked for one with a seamless user experience and dedicated HR support.

“The first sign of a great PEO comes down to their technology and the implementation of a great user experience,” he said. “Any PEO could have the most advanced platform on the market, but if my employees hate the interface, then the technology loses its value. We selected [TriNet] because I knew that my employees would appreciate their technology and a mobile-first approach to HR services.”

2. Researching User Experience

Read customer reviews to find out more about the experience of current customers. This is an important step because PEOs are much more than a software service — they are your co-employer. You can demo the software, but to get a clear picture of whether they’ll be a good partner for your business and employees, you’ll want to dive into customer reviews.

Aaron Bailey, CEO of Inbox Insight and former COO of business.com, placed high importance on user experience and customer support. When he needed a PEO for his team of 80 employees, he chose Insperity.

Insperity’s “user experience was better than its competitors’, the training and development options were very good, and their mobile app was very easy to use and had frequent improvements to it,” Bailey said.

3. Considering Your Business’s Industry

Since every small business is unique, a PEO should be able to customize its HR features to fit your needs. Some PEOs specialize in certain industries or business sizes, which can be beneficial for companies that don’t want a standard one-size-fits-all PEO approach.

Anh Trinh, founder of media startup GeekWithLaptop, said he selected Oasis for his team of eight employees because it is a reliable PEO that specializes in small businesses and startups. Trinh’s parting advice to his fellow small business owners is to identify the PEO features your business needs first and choose a PEO specializing in those areas.

4. Reviewing Accreditations and Narrowing Down Your Options

Check with the major accreditation agencies when you’re considering PEOs. While PEO companies do not need accreditation to provide good service, the credential is a good way to help you narrow down your options if you have several contenders. Accreditation will verify some major aspects of the PEO’s overall service offering.

A few of our best picks aren’t accredited but still provide great service, so your decision depends on what you value as a business owner.

5. Obtaining Pricing Quotes

One challenge that comes with shopping for PEO services is that many of the top providers do not provide transparent, publicly available pricing information. Therefore, once you’ve narrowed down your options a bit, you’ll need to request custom quotes from the PEO vendors that you are considering.

6. Choosing Your PEO

Once you’re armed with all the information on your candidates, choose the PEO that best meets your company’s needs. After you determine the plan and features your company will best benefit from, discuss any additional costs or fees with your chosen PEO’s sales representatives before you commit.

mpetitive benefits like these make you more desirable as an employer so you can attract and retain top talent.

Offloading Administrative Tasks

Another appealing quality of PEOs is their reputable administrative services, which are particularly helpful for small business owners who already wear many hats and don’t have time for all the necessary paperwork. Since PEOs are experienced in managing HR and administrative tasks, you’re free to focus on other aspects of your business and rest assured that your employees are properly managed and supported.

Expert Compliance Support

Navigating business laws, regulations and other compliance issues requires expertise that many business owners, particularly new startup founders do not possess. A small compliance mistake can have big repercussions. Partnering with a PEO allows businesses to work with compliance experts who stay up-to-date on all of the changing employment and payroll laws and requirements to avoid any costly mishaps.

Support with Domestic and International Expansions

Global expansion is no longer reserved for large enterprise businesses. Many small businesses hire across multiple states or even multiple countries to find talent that best fits their needs. PEOs can help small businesses register in new states or countries and manage local compliance and payroll requirements. International PEOs can also help with immigration and visa processes if needed.

Access to Comprehensive HR Technology

PEO services also provide access to the provider’s HR technology platform. This typically includes the key tools that you would expect to find in an HR software service, including reporting tools. Many PEO tech platforms include performance management tools, digital onboarding workflows and document management capabilities. Some PEO platforms are more tech-forward than others, but all of the services that we reviewed offered some HR technology tools to PEO customers.

Many PEOs, like Papaya Global, offer comprehensive analytics to help you make educated business decisions. Source: Papaya Global

While the PEO services mentioned above are our top picks, there are many other great HR providers on the market. If none of the choices above are the right fit for you, consider these other top-rated options.

Paychex PEO

Paychex is a professional employer organization with strong digital onboarding and employee self-service tools. Paychex PEO includes personalized payroll, benefits and onboarding support from Paychex’s HR experts and mobile-friendly, cloud-based HR software tools. Paychex’s seamless digital onboarding experience – complete with editable online forms and e-signature capabilities – makes it an excellent option for employers onboarding remote team members or simply looking to provide a more seamless onboarding experience. Read our review on Paychex to learn more.

AlphaStaff

AlphaStaff is a PEO service that provides full-service recruiting support along with traditional PEO hiring services such as onboarding support, hiring guidance and compliance expertise. Many PEO providers provide limited recruiting capabilities, but AlphaStaff provides an expansive range of technology and expert recruiting support to help employers find the right hire. Additionally, AlphaStaff offers other essential HR functions like compliance support, payroll processing, and employee benefits management. AlphaStaff stands out for its robust support and guidance, ensuring businesses receive tailored solutions for their evolving needs. Read our review on AlphaStaff to learn more.

The PEO industry has experienced a high level of growth in recent years, and it does not appear to be slowing down in 2024. The PEO industry was valued at $59.62 billion in 2022 and is expected to reach a valuation of over $152 billion by 2031. With a compounded annual growth rate (CAGR) of 11 percent, the industry is projected to grow quite significantly each year until at least 2031.

One trend we’ve already seen in 2023 is the expansion of international capabilities among standard PEO providers. International PEO solutions such as Deel and Papaya Global continue to provide robust international PEO services, but even domestic players like Rippling and Gusto are expanding international payment support within their HR software and PEO services.

Another trend that we believe will continue is the use of artificial intelligence (AI) in HR management. AI quickly became a hot topic in 2023, and as technology evolves, we can expect to see it used in more HR platforms, like PEOs, to help further automate many HR functions for companies.

At Business News Daily, our team of small business human resource experts have been researching and testing PEO service providers for years, comparing some of the leading solutions across nearly 130 key metrics. We considered 60 PEO service providers and closely reviewed and tested nine of them before selecting our seven best picks above.

Below are the factors we considered when determining our best picks. Each is weighted according to how much the criteria typically influences business owners’ buying decisions.

• Pricing (30%): We considered not just the base cost of the service but also the minimum employee requirements, per-user fees, contract lengths, and add-on costs to determine which provide the most value per dollar.
  
• Features (25%): We particularly evaluated each PEO’s tech dashboard and tested administrative HR tools, benefits management capabilities, payroll processing and tax administration, and employee training and development features. We also considered global PEO service options, as well as integrations for connecting each platform to other popular business software.
• Usability (20%): We paid close attention to the ease with which the PEO platform could be set up, how intuitive we found the navigation and use of key features, and the training and informational resources available to new users. We also considered whether the PEO offered a responsive mobile app or mobile browser for employees and HR administrators.
• Customer Support (15%): We examined the ease with which customers can contact their dedicated PEO point-of-contact in need of help. We reviewed customer feedback to determine how well the customer service team meets the needs of existing customers.
• Expert Insight (10%): Our product reviews are conducted by software and industry experts who are deeply familiar with PEO services. Given their institutional knowledge of different platforms and firsthand experiences using these programs, we take their judgment into account when determining our best picks.

In addition to scoring each PEO we reviewed based on these criteria, we also determined the best use case scenarios for each. No two businesses are exactly alike, so we put ourselves in the shoes of different types of small business owners to identify the best PEO services for a variety of needs.

To learn more about how we review and test human resource products and services for small businesses, read about our editorial process here.