Professional Employer Organization (PEO)

Let’s decode the term, its fundamentals and its role in growing your business.

What Is A Professional Employer
Organization (PEO)?

A PEO is an outsourcing firm that assists small and medium-size businesses with the tasks related to the employee management, such as human resources, payroll process, tax filings, employee benefits, safety and risk mitigation services.

When a company gets a PEO on board, it essentially forges a co-employment relationship, where the employees are employed by both parties. This set up allows the PEO to take on some of the responsibilities of an employer.   

Using a PEO to take care of the HR and Payroll aspects of a company is a very common practice in countries like the US, where employment regulations vary from state to state.

How Does A PEO Work?

When a company works with a PEO, it is assured of support in payroll processing, insurance and compensation coverage, compliance with local laws, taxations & benefits, etc. The PEO and the client-company can agree to avail all of the services or a selected few of them. This saves a lot of time and cost that otherwise would have been invested if done alone by the company.

The contracts of the employees are with the client-company, however, the remaining processes like compensation negotiations, payroll processing, tax filings, etc. are carried on by the PEO.

How Is A PEO Different From An Employer Of Record (EOR)?

The roles of a PEO and an EOR appear very similar, and a company must know the difference between the two services, in order to make the right choice. The basic difference between the two is – with a PEO, a company has a co-employment relationship, whereas, with an EOR as your partner in a specific geography, it is the legal employer of your employees.

 

 

Other difference between PEO & EOR are:

Do you have more questions?

With Skuad, you can hire top remote talent compliantly with in-country payroll across 150+ countries. There is no need to set up a legal entity to hire local talent. We will make the hiring process effortless and take care of your employees’ onboarding, payments, compliances, taxation, termination & more. If you want to explore more, please connect with us now! 

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