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What is the Purpose of a PEO?

5 min read

When it comes to running a business, time is money. And as a business owner, wouldn’t you want to seize any opportunity that could buy you back some time? 

When working with a PEO, business owners free up some space in their schedules to shift their focus back to their business’ core functions. From payroll assistance to talent management, a PEO takes tedious tasks off your plate and allows you to dedicate time to what matters most. If you’re ready to take your business to the next level with the help of a PEO, allow us to get you started with some basic knowledge. Read below to learn more about the purpose of a PEO.

What is the Role and Purpose of a PEO?

A PEO, or professional employer organization, offers full-service human resource outsourcing to businesses of all sizes and industries. Operating under a co-employment model, a PEO will take on their client company’s administrative responsibilities, allowing the employer to reallocate their time to more critical tasks. For a small or mid-sized business, these benefits go a long way as it can steer a company’s growth trajectory in the right direction. 

Providing critical HR solutions and expertise, a PEO takes care of the following responsibilities: 

HR Services

A PEO offers various HR services, including staffing and recruiting, employee benefits and compensation, retirement plans, and more. If your business already has an in-house HR team, a PEO will offer services and support to your team strategically and administratively. 


One of the key functions of a PEO is payroll. A PEO will help your business set up pay periods, payment methods, and time and attendance while ensuring your monetary methods and amounts comply with state and federal employment laws. 

Employee Benefits

A PEO will help establish employee benefits critical for employee recruitment and retention. A PEO pairs your business with insurance providers and create comprehensive benefits programs accommodating paid time off, sick leave, maternity/paternity leave, and other healthcare benefits. 


PEOs are compliance experts and will ensure your business follows state and federal employment laws. They will protect a business from fines and penalties with their knowledge of tax law and reporting requirements, unemployment insurance, workers’ compensation, and HR compliance. 

Business Planning and Research 

Some PEOs provide insight into market conditions and business growth to help their client companies make strides. A PEO can benefit businesses, particularly those without in-house marketing departments, by completing trend and competitor research and analysis. 

Safety and Worker’s Compensation 

PEOs offer a broad range of risk and compliance services to ensure your company abides by worker’s compensation laws. This will include worker’s compensation coverage and claims administration for your employees. 

How Will a PEO Benefit My Business?

When partnering with a PEO, expect major savings across the board. From saving time on tedious administrative tasks to saving money on workers’ compensation and health insurance through your PEO’s valuable network, you’ll experience significant administrative and financial relief in a PEO partnership. Not to mention, peace of mind that assures you that your business is on the right track. Generally, companies in PEO partnerships grow 7-9% faster and have a 10-14% lower turnover rate than those not in co-employment agreements. 

How Do I Know if a PEO is Right for My Business? 

While PEOs benefit businesses of all sizes and industries, the need for their assistance ultimately depends on your personal needs. A PEO may be the right solution if you lack HR support and expertise. But before bringing a PEO on board, you should consider the following factors:


Financially accommodating for a PEO is different than for an in-house HR team. While you account for your HR team’s salaries, taxes, and employee benefits, a PEO takes care of these itself. Because a PEO is its own entity, outsourcing one for HR functions is generally more cost-effective than maintaining an internal department. 

Desired Benefits

Hiring a PEO could be a good option if you’re seeking a more affordable and expansive benefits package for your employees. With their large size and network, PEOs can improve your business’s eligibility for more diverse benefits packages.

Business Expansion Opportunities 

A PEO provides consistent HR support for businesses seeking expansion to ensure employee recruitment and retention as your company grows. 

State and Federal Tax Burdens

If your business has limited expertise on state and federal taxation, a PEO could be a valuable asset. Rather than going in blind, a PEO will offer expertise on completing tax documents and other tax-related services to minimize error.

Simplify Your Business with 

At, we make it easier to find the perfect PEO provider for your business. With access to some of the largest PEOs in the country, our agents provide high-performing options that will unlock your business’s true potential. If you’re ready to take your business to new heights, connect with our team today to shop PEO quotes and receive competitive pricing within 24-72 hours!

Ready to take your business to the next level?

Contact us today to learn more about how we can help you achieve your goals.

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