Which type of outsourced HR service does your business need?
If you’re looking to outsource your HR, maybe you’ve stumbled upon an HR outsourcing model known as a Professional Employer Organization or PEO. However, this common HR outsourcing type isn’t your only option – Administrative Service Organizations or ASOs also exist. But what is the difference and what separates one from the other?
Administrative services organizations (ASOs) and professional employer organizations (PEOs) both offer human resources outsourcing services that can help your small or mid-size business grow. By reducing the amount of time that you have to spend processing payroll or handling common human resources tasks, your outsourcing partner allows you to focus on your more immediate business needs. Determining which service is right for you is a critical first step in relieving some of the burden from your shoulders.
What is a PEO?
A PEO takes on the administrative function of an HR department working through a co-employment relationship. This relationship makes the PEO the employer of record for tax purposes and in the eyes of the IRS and other government agencies. As the employer of record, your PEO is also able to offer your employees access to their benefit plans which may or may not be more cost effective than a customized plan. Working with a PEO is more of a one size fits all option where you operate on the PEO’s systems and under their identity which is not transferable once you outgrow the offering.
What is an ASO?
ASOs are also able to provide administrative HR outsourcing options, including processing payroll, benefits administration, and assistance with ensuring regulatory compliance; however, an ASO does not require you to sign a co-employment agreement. As such, an ASO will not sponsor your benefits plans or remit your taxes under its EIN, the ASO will do so on your behalf. An ASO is a more customized HR outsourcing option that is transferable when you decide bringing HR in house is a more viable option.
What’s the difference in responsibility?
There are several key differences in the level of responsibility of each type of HR outsourcing organization in relation to your company. Determining the services and responsibility that your company needs to succeed is vital in deciding which type of organization is the right choice for you.
Which is right for your company?
While both models can offer valuable HR assistance and support for your company, the decision ultimately comes down to the level of customization you would like and how quickly you think you will outgrow the outsourced option. SCG’s ASO option is completely customizable to your needs and can be transferred to you when you outgrow the outsourced option.
Learn more about SCG’s ASO option and contact us for your free consultation today.
