Professional employer organizations (PEOs) are valuable because they take the frustrating corporate tasks out of your hands so you can focus on running your business. Your ability to wear multiple hats – part of what made your business so successful – can become counterproductive as your business grows, draining you of the valuable time and resources you need to keep your operation going.

PEOs specialize in services like human resources management, payroll processing, state and federal tax compliance, and benefits administration. These tasks are all crucial for your employees – they need to be paid, receive benefits and be part of a productive office culture. But many of these tasks can feel like full-time jobs in and of themselves. PEOs provide a unique co-employment model that grants small businesses access to Fortune 500-level benefits, standardized HR policies and practices, risk management support, and workers’ compensation coverage, plus an extensive library of training resources to educate employees and partners on an array of topics.

More than 150,000 small businesses use PEOs to access benefits and corporate HR structures. The industry has grown considerably in the past few decades, with more than 900 PEOs now in the U.S. alone. The National Association of Professional Employer Organizations (NAPEO) found that 43 percent of the market is represented by only five companies. This presents an interesting choice for the small business owner: You can partner with a major company, with all the backing and top-of-the-line resources that come with their size, or work with a smaller company and get more personalized attention.

A PEO differs from HR outsourcing companies or administrative service organizations because of the co-employment model. This model allows a PEO to “own” hundreds of thousands of employees across thousands of businesses in the U.S., driving down health insurance costs and making HR standardization an easy process. Whether a PEO is right for your business depends on your various needs. Our buying guide will help you determine whether a PEO is right for you and give you some good questions and concepts to keep in mind throughout your search.

Before diving into PEOs and deciding what’s best for your business, consider reviewing some reputable PEOs in your state on the NAPEO website. This site provides resources for small business owners looking to learn more about PEOs. It also provides a PEO finder, so you can search different companies, verify their credentials and compile a shortlist of companies you’re interested in contacting.



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