You are here: DIME Home > Business > PEO or ASO: Professional Employer Organizations vs Administrative Service Organizations

PEO or ASO: Professional Employer Organizations vs Administrative Service Organizations

As an entrepreneur, you may often find yourself doing things that you never wanted to do. You want to focus on your business, however, "employee business" keeps getting in the way. Most companies find that by offloading some of this busy work it allows them far more time to spend on increasing revenue allowing their business to fare better in the long run. Unlike outsourced payroll, both PEOs and ASOs offer additional services to relieve you from administrative work, however deciding which way to go can be a challenging process.

Author: Carolyn Stoll
Date: Jan 21, 2011 - 12:45:50 PM

Printer friendly page

As an entrepreneur, you may often find yourself doing things that you never wanted to do. You want to focus on your business, however, "employee business" keeps getting in the way. Most companies find that by offloading some of this busy work it allows them far more time to spend on increasing revenue allowing their business to fare better in the long run. Unlike outsourced payroll, both the PEO and ASO offer additional services to relieve you from administrative work, however deciding which way to go can be a challenging process.

The ASO provides administrative services for your organization such as processing payroll, performing direct deposits, and filing payroll taxes. Like outsourced payroll, the filing is under you federal employer's ID number (FEIN). However, unlike outsourced payroll, the ASO will provide assistance with questions concerning compliance and legal concerns, access to insurance, worker's comp, and medical and dental benefits. These offerings and costs are based on your employee base and employment risks associated with them remaining in your organization. The ASO provides the small business employer, "employment related" relief for businesses with 50 or more employees.

PEO's offers similar services to the ASO, however, the offering is actually more comprehensive. Unlike ASOs, PEOs take on a level of shared risk with your business. Because of this risk, the Professional employers organization will assume responsibility for employment, government compliance regarding issues such as new hire state reporting, filing and paying taxes to the proper entities, unemployment claims administration, and worker's comp issues. PEO's also provide access to pooled employee medical, dental, and other related healthcare plans. This pooling ideally provides smaller future cost increases to your business. As you know, one significant claim can considerably increase your fees; the PEO can absorb these costs against a larger company base. Traditionally, the PEO contract states that all services are accomplished and performed by the PEO using their FEIN, a key difference from the ASO. Small business owners may believe they are giving up control to the PEO, however, after reviewing the PEO agreement, the responsibilities of the employer and that of the PEO can easily be defined. For example, the small business owner will continue to make hire, fire, and salary decisions yet can take advantage of risk transferrence on to the PEO.

PEOs are excellent for companies having 1 - 50 employees or for those groups that have many small pockets of employees across the United States. That being said, there are still many companies that have much larger employee counts that derive and enjoy great benefits from PEO's.

Deciding whether to go with a PEO or an ASO from an outsourced payroll model is truly up to the individual employer. A rule of thumb is to take into effect employee count when making your decision. The bottom line is that you are in control no matter which direction you pursue. First, identify which features would free up your time the most, the Peo services Selection Tool by PEOcompare.com is a great place to start. Second, contact fellow small business owners and ask for feedback on their opinion on PEO's vs ASO's. Either way you decide to go, this type of service will almost always benefit your company in the long run.

Carolyn Stoll is a frequent contributor to PEOcompare.com and writes about the PEO and issues affecting small business such as small business employee motivation, different PEO's like the Chicago PEO and the PEO Virginia Company, PEO Employment, and much more. She can be reached at c.stoll@peocompare.com.

View all articles by Carolyn Stoll

Link to this article:

Code to copy:

<a href="http://www.dime-co.com/business/PEO-or-ASO-Professional-Employer-Organizations-vs-Administrative-Service-Organizations.shtml">PEO or ASO: Professional Employer Organizations vs Administrative Service Organizations</a>

---

Search for articles: Advanced Search

Recommended Associates

Latest Articles in All Categories

Putting Up a Small Commercial Printing Business

So You Might Be Unemployed And Desire To Become A San Francisco Real Estate Investor Now

Meditation and Mindfulness: Dealing With Emotion

CPA Websites: Five Essential Ideas for Composing Convincing Articles

Set Goals In Order to Come Up With Your Action Plan

Is the Air in Your Home Safe to Breathe?

Coarse Fishing Tackle Review: The JW Young 13ft Trotter Rod

Section 1031 Exchanges For San Diego Real Estate Investors

Phoenix Real Estate Investing For Highest Possible Earnings

Legendary are the Volk Racing TE37 Wheels

Developing the Next Generation Wall Station (ChaseDesk™) for Healthcare - A Case Study

What are step down transformers?

Introducing Sharehype, the Revolutionary Tool for Online Marketers

Rewards To Shopping For Austin Real Estate On The Web

Hydroponics for Beginners

Do you write?

Would you like submit your articles and have them approved on a priority status? Find out more about how you can become a Priority author for pennies a day! Click here.

News Feed

Dime-co.com Home

Business (9328)

Computers & The Internet (5740)

Entertainment (1348)

Family (958)

Finance (1963)

Health (4246)

Home and Living (6670)

Marketing (6113)

Shopping & Product Reviews (2624)

Sports (694)

Travel and Vacations (1689)

Video Articles (1)

Editors Pick (1)