What’s in an acronym? Well, in the world of HR services for small businesses, there is a whole lot. There are options for small business owners who have reached the end of their frustration with HR. Running a business and managing people get pretty messy as you grow. Chances are, you’ve been on the Internet looking for solutions. If you have, you have noticed the terms ASO and PEO as ready solutions for the small business HR problem. Which one of them is the better choice? The debate of ASO vs. PEO is really up to the individual small business owner, but it helps to know what the differences are.
Every small business is as individual as the things they offer the world. No one ASO or PEO is the right fit for every company. No matter what their salespeople tell you. You may even know a fellow business owner or two who swear by whichever one of these they are using. That doesn’t mean it will work for yours. If you’ve heard that ASOs and PEOs are basically the same, you are wrong. There are some definite differences to discover so you understand which of these HR solutions is the right one for your small business’s needs.
When you start your own business, you want to keep as much decision making for yourself as possible. That is until it all goes so well that you realize you can’t do it all and do anything well. Once a small business owner gets to that stage, it’s time to delegate some chores and find some qualified help. Most small business owners will admit their HR skills are not what they need to be and it doesn’t get as much attention as other things going on in their business. It’s the wise leader who knows his or her limits. So, what does an HR solution like an ASO or PEO do for the small business owner?
Let’s talk about what they both do before we get to ASO vs. PEO. First off, both of them are going to help you with the administrative functions of HR. That’s all the paperwork and compliance stuff you don’t want to do on your own. There are two reasons you don’t. The first one being most small business owners do not have the time to keep up with HR compliance and local, state, and federal labor laws. That can be a full-time job all on its own.
Even though an ASO and a PEO will help you with labor compliance, both are going to require you to follow through with the labor compliance directions they are giving you. They provide you with the right information but it’s your responsibility to follow through. Neither one of these organizations is going to take the heat for your failure to comply with the laws they told you to follow.
This is where the rubber surely meets the road on what factors into ASO vs. PEO for the small business owner. What is different about these two that small business owners should pay attention to?
An ASO, or Administrative Service Organization, is exactly what you’d think it would be. They do administrative functions related to HR at a small business. Yes, they help you with labor laws and employment compliance but there are things they are not going to necessarily do that you probably lump into HR.
First, an ASO is not going to manage your health and welfare benefits. An ASO could supply you with benefits options with some of them, but they won’t be managing those benefits for you. A PEO, or Professional Employer Organization, not only supplies you with health and welfare benefits but they manage your policy administration so you don’t have to. PEOs are a turnkey benefits management solution.
Second, an ASO is not going to help you with Workers’ Compensation plans or management. That is up to the small business owner to handle. Most ASOs also don’t help with risk and safety benefits either. A PEO, on the other hand, does supply their own Worker’s Compensation plans to small businesses and also provides risk and safety benefits and training. You can count on a PEO for aspects of Workers’ Compensation down to claims management. An ASO is not going to help you with that.
Thirdly, an ASO doesn’t help you with paying your payroll taxes. That burden is squarely on the small business owner to keep up with. A PEO manages all aspects of payroll, including paying federal payroll taxes. If keeping up with your payroll taxes as been an issue for you doing payroll yourself, a PEO is the better solution for keeping Uncle Sam from knocking on your office door.
If the best choice for your small business in an ASO vs. PEO, you will find hundreds of companies to choose from. Which one is the best one? You could spend a month combing the Internet comparing them all or you could work with a PEO Broker who knows the business inside and out. PEO Spectrum is the New York PEO Broker of choice and they can help your small business find the right one.
If you’d like to find out which PEO is the right one for your small business, contact us today for a free consultation. 20 minutes is all it takes to find the best PEO options for you.
If you’d like to find out more about how PEOs can help you provide great benefits and payroll management at less than you are paying now, contact us today for a free consultation.
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