Service model comparison
PEO vs. payroll service
Payroll software or a payroll bureau solves a narrower problem than a PEO; the comparison is about what else you have to own.
PEO
- Co-employment arrangement
- Often bundles payroll, benefits administration, and risk services
- Access to a larger benefits group
- Fee is per-employee or percentage of payroll, on top of premiums and taxes
Payroll service
- Calculates pay, withholding, deposits, and filings
- No co-employment
- You keep your benefits broker and plans
- Fee is typically low per employee, with premiums and taxes paid separately
How should you make the decision?
Start with the work your company needs performed, the decisions that require internal ownership, the amount of day-to-day capacity required, and the risks of changing models. Then ask providers to map their scope against that operating picture.
A model is not a quality guarantee. Service teams, implementation, systems, pricing, and contract terms differ materially within every category.