The Best PEO Service Providers of 2022

What is a PEO?

A Professional Employer Organization or PEO is an outsourced HR department for small and medium sized businesses. Instead of hiring an internal HR team, your employees are joint employees of both your business and the PEO. Typical functions of a PEO would be benefits administration or payroll. PEO’s may also handle worker’s compensation administration, drug testing, and FMLA administration and anything else that an internal HR team would oversee.

The 7 Best PEO Services for Small Business of 2022

• Best for Startups: Oasis
• Best Technology Platform: Justworks
• Best Tailored Plans: TriNet
• Best SMB Resources: Insperity
• Best Customer Service: ADP Totalsource
• Best for Scale: Rippling
• Best International PEO: Papaya Global

• Professional employer organizations, or PEOs, provide small businesses with HR management, benefits administration and payroll processing support.
• Many of the best PEOs are accredited by an outside agency, such as the ESAC, IRS or BBB.
• Look for companies that provide personalized support, like designated customer service agents and HR consultants.
• This article is for small businesses interested in growing the administrative side of their company through a PEO.

A professional employer organization (PEO) is a human resources solution for small and midsize businesses that don't have internal HR staff. A PEO takes the place of an internal human resources department by handling your payroll, employee benefits and other HR-related needs. When selecting a PEO for your business, you have several factors and many services to consider. To make the process easier, we've chosen the PEOs we think are best for various use cases and business types.

PEOs use two main pricing structures for small businesses: per-employee fees and percentages of total monthly payroll. These costs range from $40 to $160 per person, or 3% to 12% of your monthly payroll, depending on the company and plan you choose.

You also need to consider the contract lengths. Some PEOs offer short-term contracts, while others lock you into multiyear deals. Here are some other important factors in the cost of your PEO service.

Plan Structure

Find the plan with the services that fit your business's needs. For instance, some plans include employee onboarding, workers' compensation support, payroll processing, and risk and compliance management. PEOs can offer one-size-fits-all solutions or tailored solutions based either on your industry or your company's size.

Additional Fees

Throughout the research and sign-up process, be on the lookout for any additional fees you'll have to pay. Many PEOs don't mention additional fees until it's time to sign the paperwork. Before you sign up, request a detailed breakdown of all pricing and fees in writing, and review line by line where your money will go. If a PEO service is not willing to provide this information, consider it a red flag.

Did you know? PEOs provide not only payroll processing and HR support but also benefits administration. Keep in mind, though, that a PEO service's fees do not include the actual cost of the benefits you provide your employees. The cost of benefits administration is usually added to your monthly or yearly fee.

Employee Minimums

Some PEOs require you to have a certain number of employees in order to use their services. This minimum is usually five employees. For many businesses, this will be a nonissue, but if you run a very small or new company, your options for PEO support are more limited. Other PEOs may require a minimum monthly salary if your business a certain employee threshold.

A professional employer organization, or PEO, is an HR service that operates through a co-employment model, which means your employees are on the PEO's books but still under your management. PEOs manage functions like payroll, HR administration, employee benefits, risk management and regulatory compliance, workers' compensation, and employee training and development for their client businesses. When you choose a PEO, make sure it can perform all of the HR functions you need and scale with your business as it grows.

It is important to find a trustworthy and certified PEO, since it will be deeply integrated with your company. PEOs can earn certain certifications and accreditations to demonstrate that they abide by best practices, meet strict financial guidelines, and comply with all employment laws and regulations. The Employer Services Assurance Corporation (ESAC), the Internal Revenue Service (IRS) and the Better Business Bureau (BBB) all have accreditation programs for qualifying PEOs.

Finding a PEO is not as difficult as you may think. The first step of any business purchase decision is assessing your business's needs so you can narrow the field down to companies that can help you solve those problems. Once you compare these companies' pricing, features, and contracts, you should have a good sense of which one is best for your business.

We interviewed some small business owners and managers to better understand what the decision process is like for SMBs interested in partnering with a PEO. While your buying decisions will be unique to your company, here are a few basic steps to find the right PEO for your company.

1. Review the technology.

When Max Prokell, founder and CEO of Venta Marketing, was choosing a PEO for his marketing team of 15 employees, he looked for one with a seamless user experience and dedicated HR support.

"The first sign of a great PEO comes down to their technology and the implementation of a great user experience," he said. "Any PEO could have the most advanced platform on the market, but if my employees hate the interface, then the technology loses its value. We selected [TriNet] because I knew that my employees would appreciate their technology and a mobile-first approach to HR services."

2. Research the customer support experience.

Aaron Bailey, general manager at DZone and former COO of business.com, placed high importance on user experience and customer support. When he had to find a PEO for his team of 80 employees, he chose Insperity.

Insperity's "user experience was better than its competitors', the training and development options were very good, and their mobile app was very easy to use and had frequent improvements to it," Bailey said.

3. Consider your business's industry.

Since every small business is unique, a PEO should be able to customize its HR features to fit your needs. Some PEOs specialize in certain industries or business sizes, which can be beneficial for companies that don't want a standard one-size-fits-all PEO approach. 

Anh Trinh, founder and CEO of media startup GeekWithLaptop, said he selected Oasis for his team of eight employees because it is a reliable PEO that specializes in small businesses and startups. Trinh's parting advice to his fellow small business owners is to identify the PEO features your business needs first and then choose a PEO specializing in those areas.

4. Review accreditations and narrow down your options.

It's a good idea to check with the major accreditation agencies when you're considering PEOs. While PEO companies do not need to have accreditation to provide good service, it is a good way to help you narrow your options down to the best if you have several contenders. A few of our best picks don't have accreditation but still provide great services, so it ultimately depends on what you value as a business owner. While accreditation will verify some major aspects of the PEO's overall service offering, it won't guarantee an excellent experience for every business, of course.

5. Choose your PEO.

Armed with all the information on your candidates, you can now choose the PEO that best meets your company's needs. After determining the plan and features your company will benefit from, discuss any additional costs or fees with your chosen PEO's sales representatives before you commit.

Many small businesses find it helpful to partner with a PEO that can handle the HR functions that are essential to hiring and keeping employees. As your business expands and you need to hire more workers, it becomes critical to offer benefits such as healthcare, and others that are harder to find. Quality benefits help you attract and retain competent, hardworking staff. PEOs relieve the stress and legal paperwork burden of hiring and onboarding these new employees. They can also help your business comply with federal and state regulations throughout your HR processes.

Did you know? Many PEO companies have a five-employee minimum for services. While this may not work for very small businesses, this common requirement marks the point where small businesses typically start to need PEO support.

HR Administration

The primary function of a PEO is to take care of human resources so that business owners can focus on other duties. PEOs can provide as much or as little HR assistance as you need. They can manage HR tasks such as employee handbook and policy creation, employee onboarding and termination, unemployment assistance, and compliance reporting. Their features are typically accessible through intuitive online platforms and mobile-friendly applications. These platforms make it easy to access all of your HR functions in one place.

Payroll Processing

One major function of most PEOs is payroll processing. Since your employees are on the PEO's books, it tracks their time and attendance – including hours worked, paid time off, sick time and vacation days – through its online platform and helps prepare and issue their paychecks. It can also process employee liens and garnishments if necessary. Many PEOs can manage and report your quarterly and year-end state and federal deposits and filings. A PEO taking care of your payroll can save you a lot of time and therefore money. A reputable PEO will always pay your employees accurately and on time, which could improve your company culture if payroll has been hard to manage in-house.

Risk and Compliance

PEOs are usually well versed in the laws and regulations that your company has to follow, so they can help you manage risk and legal compliance for your business. This service is especially beneficial if you operate in multiple states or regions with varying employment laws. PEOs can help your business comply with the Affordable Care Act, the Health Insurance Portability and Accountability Act, and the Occupational Safety and Health Administration. They can even conduct employee accident investigations and perform onsite safety inspections and job hazard analyses in some cases.

Employee Benefits

Since PEOs have so many employees on their books, they have access to affordable, desirable employee benefits, including medical, dental, vision and life insurance. Some even offer health savings accounts, flexible spending accounts and health reimbursement arrangements. They often provide long- and short-term disability insurance, employee assistance programs, and retirement options like 401(k) plans. Many PEOs offer a wide selection of fringe benefits too, such as commuter reimbursement programs and parking discounts.

Workplace Training and Employee Development

Most PEOs offer standard workplace training on topics like sexual harassment and discrimination. Many of them offer additional onsite and virtual training on leadership, communication, workplace technology, recruitment, disciplinary actions, and social media. Some even offer industry-specific training. This access to employee training and development materials can help you encourage growth and skill advancement for your team. PEOs that offer training and development often have an online platform to track and report employee course results.

PEOs provide several advantages for small business owners and their employees. One significant benefit is that you can offer affordable health insurance benefits to your employees that you might not be able to access otherwise. Most PEOs technically have thousands of employees, so they can receive discounted rates. Similarly, PEOs can offer your employees disability and life insurance plans, retirement plans, transportation reimbursement, and other fringe benefits they may want. Offering competitive benefits like these makes you more desirable as an employer, helping you attract and retain top talent.

Another appealing quality of PEOs is their reputable administrative services, which are particularly helpful for small business owners who already wear many hats and don't have time for all the necessary paperwork. Since PEOs are experienced in managing human resources and administrative tasks, you can focus on other aspects of your business and rest assured that your employees are properly managed and supported. PEOs also help you comply with current payroll tax regulations, provide unemployment insurance and workers' compensation coverage, and offer workplace training for your staff.

Tip: Ask PEO companies you're considering if you can see a demo of their software, because the PEO's online platform is the arena for all your business's HR, payroll and benefits needs. If your employees and managers can't quickly learn how to use it, it will end up creating headaches rather than solving problems.<

What type of business needs a PEO?

If you need help with any HR functions, a PEO could be a great option for your business. Essentially any small business in nearly any industry can partner with a professional employer organization, and some providers even offer industry-specific solutions. However, most PEOs require you to have at least five employees. Large businesses can use PEOs as well, though they tend to have internal HR departments, making most of a PEO's services unnecessary.

What features do the best PEO services have in common?

The best PEO service providers can manage and maintain as many or as few human resources functions as you need, including HR administration, payroll processing, workers' compensation, employee benefits management, risk and compliance management, or training and development.

PEOs are experts in legal compliance for your state and industry, so they can reduce your company's risk of lawsuits. Many PEOs provide online portals where employers and employees can access their benefits and HR self-service easily, but the best companies also offer mobile apps and one-on-one customer service. The best PEOs also tend to be accredited by the ESAC, IRS, and/or BBB.

What are the disadvantages of using a PEO?

There are a few potential downsides to consider before you employ a PEO service to handle your company's HR tasks. For example, a PEO acts as a co-employer over your staff, which means it could be an outside influence on your company culture. Some business owners want to maintain control over their organization's culture without the involvement of a co-employer.

Another potential negative is a perceived lack of security. When a PEO manages your payroll and taxes, it has access to sensitive company information and employees' personal data. This makes some employers or their staff uneasy about security. The best PEOs implement strict security measures, so it is important to partner with a reputable, accredited company.

How does a PEO and an ASO differ?

The biggest difference between PEOs and administrative services organizations (ASO) is that PEOs operate under a co-employment relationship and ASOs do not. ASOs tend to be more flexible than PEOs as well; a business can partner with an ASO to receive assistance with as few or as many HR services as they need, whereas PEOs typically provide bundled HR services.

Since ASOs do no operate under a co-employment model, they don't provide employee benefits or workers' compensation coverage. However, they can put you in touch with brokers for those services.

[Read Related: PEO VS EOR?]

How long does the PEO implementation process take?

Implementing a PEO service in your business takes three to six weeks, with the average transition time being about four weeks (which starts at the beginning of your payroll cycle). During the implementation process, the PEO works with your company to ensure it has all the proper employment details on each team member.

How does a PEO help with employee recruiting?

PEOs can help small businesses manage a variety of HR functions – including recruitment. Instead of wading through stacks of job applications, you can lean on your PEO throughout the process, because PEOs employ knowledgeable HR professionals with the necessary experience and resources to find and recruit top talent for your company.

They also understand the current employment and labor laws that impact recruitment and hiring, so you can rest easy knowing that your business maintains legal compliance throughout the process. Additionally, since you'll gain access to great employee benefits with PEOs, you can promote your comprehensive benefits packages to attract top talent.

The PEO industry is expected to grow exponentially over the next five years, which is a good indicator that PEOs are evolving their services to meet the ever-changing needs of employers and employees. In 2022, you can expect to see PEO tools that allow employees to access self-service functionalities and enhanced employee benefits to becoming more permanent offerings. Employers can also look forward to increased assistance with administering legal compliance and preventing employee burnout.

Many employees are permanently working in remote and hybrid work environments, which means they need access to their HR services outside the traditional office space. Look for PEOs to accommodate this by offering cloud-based platforms that can be accessed from any location. Employees like the freedom to access and modify their HR resources themselves, so you can expect to see a rise in self-service PEO technology that allows users to modify their benefits, track hours and request time off remotely.

Benefits like flexible scheduling, affordable health insurance, health and wellness plans, and professional development opportunities have become a top priority for many employees, so we expect more PEOs to increase offerings in these areas. Offering these employee benefits can put employers at an excellent advantage for recruiting and retaining top talent. 

The legal expectations for employers have evolved over the past year, and PEOs must remain up to date on all employment and labor laws, such as those concerning healthcare, sick leave, workers' compensation, COVID-19 testing, and vaccinations. PEOs will need to work closely with the small businesses they serve to maintain safe and secure workplaces.

To determine the PEO services we think are best for small businesses, we spent dozens of hours researching the top companies. Here is an explanation of our selection process.

Locating the Best Services

To determine the best PEOs for 2020, we started with 60 companies. We found these companies by considering the top industry players, searching the National Association of Professional Employer Organizations' website and conducting an extensive internet search. Some of the PEO services on our initial list had contacted us, asking to be considered for our PEO review.

Choosing the Best Services

We whittled this initial list of 60 down to roughly 30 companies. We reviewed their service offerings, pored over company websites, determined whether they were national PEOs, and verified whether they were accredited by the IRS and the Employer Services Assurance Corporation. From this list, 10 stood out as potential best picks: ADP TotalSource, Engage PEO, G&A Partners, Insperity, Justworks, Oasis, Paychex, Tandem HR, TriNet and XcelHR.

Researching Each Service

We took a deep dive into the 10 remaining companies with an in-depth look at their available services, contract structure, pricing, online and mobile access, personalized customer experience, and any standout features. We posed as small business owners, interacting with the PEOs by email, live chat, and phone to determine what the sales experience was like and grade their overall customer service.

Analyzing Each Service

Of these 10 companies, four would be our best picks for startups, small businesses, customer service and businesses in specialized industries. Oasis, Insperity, ADP TotalSource and TriNet all withstood our rounds of testing and earned best-pick status. We analyzed each for the following features and services: payroll services, benefit options, HR guidance and support, pricing structure, online and mobile employee access, customer service, accreditation, number of states served, training resources, company size and standout features.