What’s the Difference Between an ASO and a PEO?
Administrative solutions outsourcing (ASO) and professional employer organizations (PEO) are two types of partnerships SMBs can consider when outsourcing their HR needs. While both models provide administrative services, they differ in significant ways. Below we’ll break down the differences and similarities between ASOs and PEOs so you can decide which solution is right for your businesss.
Key Differences Between ASOs and PEOs
The biggest difference between ASOs and PEOs is the nature of their relationship with the client business. PEOs establish a co-employment relationship with the client business meaning the PEO becomes the employer of record for tax and insurance purposes and shares certain employer responsibilities with the client’s business. ASOs do not maintain a co-employment relationship.
Here are a few other areas where ASOs and PEOs differ:
- Group purchasing power – The co-employment nature of PEOs means they can deliver robust HR solutions and Fortune-500-style benefits packages that are otherwise unattainable for SMBs by leveraging economies of scale. ASOs cannot provide this benefit.
- Risk management – PEOs assume a share of the employment-related risks and are therefore able to provide more comprehensive risk management services than that of an ASO. This includes assistance with workers’ compensation, liability and compliance.
- Flexibility – In terms of flexibility, this is an area where both PEOs and ASOs shine. Because these HR solutions are customizable, businesses can choose which administrative functions they most need help with.
In summary, the primary difference between ASOs and PEOs is the co-employment relationship. PEOs establish a co-employment relationship with the business whereas ASOs do not. Because of this, PEOs are often able to provide a more comprehensive scope of services.
The good news Is that regardless of your needs, you can find a customized solution right for you. At The OIS Group, we offer clients a full review free of charge so we can develop a tailored HR solution that’s right for them. To learn more about our services, contact us today.
