The business model is the main difference between an ASO and a professional employer organization (PEO). Both provide HR services, such as payroll and tax management, human resources consulting, employee benefits administration, risk management, and time and labor management.
Only PEOs sponsor a company’s benefits and use their employer identification number (EIN) to issue payroll and remit an organization’s taxes. This is done through a co-employment agreement in which the PEO becomes the legal employer of a business’s employees.
Known for offering a high-touch service model, an ASO does not require this type of agreement and is frequently offered at a lower cost (compared to a PEO).