PEO payroll services: which one is the best for your company?

PEO payroll services: which one is the best for your company?

8 de December, 2021

If you’re considering outsourcing PEO payroll services to increase accuracy, reduce your administrative amount of tasks, and free up your HR team to focus on different activities, this is a good idea, but unless you choose the appropriate alternative for outsourcing, you’re not going to be able to see the whole benefits of it. What can you do to make the best decision?


PEO payroll services: which one is the best for your company?


Sometimes it can be a little bit difficult to manage all payroll activities, so today more and more companies count on professional payroll services providers. Most of the time these services are suitable for all kinds of organizations. Whether you are running a small business or a big organization, you can find a suitable solution for you.


Let’s check out the two main types of payroll outsourcing 


You need to know that the options are the Professional Employer Organization (PEO) and Payroll Service Provider (PSP). Let’s revise the differences between PEO services and PSP services, so you can choose a suitable payroll partner.



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What is a professional employer organization (PEO)?


The letters P.E.O stands for Professional Employer Organizations. They are also known as an employee leasing model, and that definition describes very well what they do, because a PEO will hire employees and you’ll lease them back, so you’re technically both co-employers.


Since the employees technically work for the PEO as well, the PEO will also be responsible for a wide range of workforce management functions like payroll, worker compensation, benefits and compliance. 


What is a Payroll service provider (PSP)?


These providers handle the administrative and compliance functions, including paying employees each pay period that normally include tax filing and employee pay options. 


Depending on the option you choose, they may also offer solutions for your business such as HR benefits, and compliance, so while you may just use a vendor to process payroll at the beginning, you could make the decision of using the option to outsource other functions until your main needs change in the future.


About the pros a cons




This option means your company will get more than just payroll processing. The full service approach of a PEO gives more free time to your HR team as we’ve said in previous posts, so they don’t have to take care of additional functions like hiring, health insurance and workers’ comp.


Under your co-employment relationship with a PEO, you’ll maintain responsibilities within the company such as assigning activities and providing your employees the tools and different spaces to work.


Payroll Provider


An outsourced payroll provider will be responsible for processing your payroll and its related functions. However, many payroll providers also offer a complete suite of solutions to help you manage your team members, including HR, benefits and compliance.


If you decide to work with a payroll provider, you still manage all your day to day operations and your workers. They will process payroll, unless you also want to use them for other workforce support and services like Human resources.

Only you and the members of your organization know about your priorities for outsourcing payroll, so you are the one to consider what’s the best fit, so you’ll need to decide what activities of a PEO or payroll provider will best meet all your needs.


Midtown HR is the company behind a hundred happy companies. We´re focused on simple solutions for payroll and taxes, propose benefits that really feel like benefits, keep up with employment law and also help protect your team.


MidtownHR is a PEO

We are a Professional Employer Organization (P.E.O.) that offers small and medium-sized businesses a full suite of solutions for their human resource needs.