Best PEO Companies for Small Business
We reviewed dozens of reputable PEO providers to choose the best for small business in 2024.
Fact Checked
Professional Employer Organizations (PEOs) offer small business owners a solution for outsourcing human resources (HR) tasks. Without a PEO, small businesses face HR challenges. By contrast, a PEO can provide a significant competitive advantage to small businesses by enabling them to offer the same level of benefits and HR support as larger corporations.
In this guide, we provide a comprehensive study of popular PEOs on the market to ensure you find a PEO vendor that meets your company’s unique needs.
Our Top Picks
PEO Companies for Small Business Reviews
We’ve taken on the challenge of selecting the top PEO vendors, meticulously choosing seven standout options from a pool of 24. The best PEO companies on our list cover the essential HR aspects your business may require. Our selection process includes studying software features, pricing transparency, customer support, and overall brand reputation.
Our editorial team and external HR experts have rigorously vetted these selections for small and medium-sized businesses (SMBS). For more information, check out our methodology section for the complete breakdown.
Deel
Best PEO for Startups
Deel stands out as an exceptional PEO solution for small businesses where you can create a tailored PEO that meets local compliance requirements. By offering comprehensive PEO services that streamline HR, payroll, and compliance processes, Deel allows startups and entrepreneurs to simplify their tasks and focus more on growing their businesses rather than navigating administrative challenges.
Remote
Best for Global Companies
Remote is not technically a PEO; however, it can be considered in this category because it provides the option to use EOR services. Remote is a great HR solution for a globally distributed workforce. Between global payroll and compliance services, benefits, and even stock options, it can easily handle international HR requirements cross-borders.
Rippling
Best for Growing Companies
Rippling uniquely combines PEO services ranging from HR, payroll, benefits, and IT management into a single platform for small businesses. It boasts a user-friendly interface and seamless integration and has cost-effective and time-saving advantages.
Its ability to handle employee onboarding, payroll administration, and benefits management effortlessly distinguishes Rippling as a compelling choice for small business owners seeking a robust and efficient PEO solution.
Papaya Global
Best for International EOR Services
Papaya Global is a global workforce management platform that provides small businesses with end-to-end solutions for managing their international workforce. Offerings include setting up an EOR or integrating with your existing setup to pay and manage contractors and full-time employees. Papaya Global is affordable, easy to use, and stands out for its ability to streamline complex global HR processes.
Paychex
Best PEO for Less Than 5 Employees
Paychex stands out as a comprehensive solution for very small businesses – less than 20 employees – by offering payroll processing, human resources management, employee benefits administration, and regulatory compliance support. It’s an excellent and easy-to-use solution if you’re a business looking to hire your first employee while still being able to offer the healthcare benefits and retirement plans that large companies provide.
In addition, you receive tailored assistance through in-house HR specialists to meet your specific needs and navigate the complexities of workforce management.
Justworks
Best PEO for Payroll Services
Justworks is a comprehensive PEO that stands out for its user-friendly platform, providing small businesses with streamlined payroll, HR, benefits administration, and compliance services. With an emphasis on simplicity and transparency, Justworks simplifies complex HR processes, allowing you to manage your workforce efficiently.
Insperity
Best PEO for Comprehensive HR
If you’re looking for a PEO that offers an all-encompassing HR service, then Insperity might be best for you. From payroll processing to risk management, Insperity offers small to medium-sized businesses a comprehensive selection of HR tools, allowing you to focus on growing your business.
One notable feature is that Insperity offers thousands of online courses and materials to help your employees and leadership team increase their skills and knowledge of HR matters.
Compare the best PEO companies for small business side-by-side
| Brand | Best for | Starting Price | Free Option |
|---|---|---|---|
| Deel | Startups | $49 /month /user | Deel HR |
| Remote | Global Companies | $29 /month /contractor | HRIS |
| Rippling | Growing Companies | $8 /month /user | None |
| Papaya Global | International EOR | $3 /month /employee | None |
| Paychex | Less Than 5 Employees | Request a quote | None |
| Justworks | Payroll | $59 /month /user | None |
| Insperity | Comprehensive HR | Request a Quote | None |
What is a PEO?
PEO stands for Professional Employer Organization. It’s a third-party outsourcing firm that acts as a co-employer to employees and provides comprehensive HR services to businesses. By managing payroll, benefits administration, and compliance tasks, PEOs allow companies to focus on bigger operations while sharing employer responsibilities and liabilities.
How does a PEO work?
When you partner with PEO service providers, you typically enter a co-employment arrangement. This involves the PEO taking on payroll processing, benefits administration, and HR compliance responsibilities. Unlike a standalone payroll service, a PEO assumes a broader role by becoming a co-employer, sharing employment-related risks and responsibilities with you.
PEO vs. EOR – What’s the difference?
While a Professional Employer Organization (PEO) and an Employer of Record (EOR) handle similar tasks, they have some critical differences. A PEO and EOR can perform HR management tasks, such as payroll, benefits, taxes, and HR responsibilities. The difference lies in their relationship with your employees.
In the case of a PEO, your company can contract with the organization to handle various services. Through a co-employment arrangement, the PEO becomes the employer of record for tax and insurance purposes, assuming shared responsibilities.
Conversely, an EOR acts as the official employer for tax purposes while your employee works within your company. Also, overseeing a range of services, the crucial distinction is that with an EOR, there is no co-employment arrangement; your company becomes the client of the EOR, where employees perform their work.
Benefits of a PEO for Small Business
Small businesses can benefit significantly from engaging with a PEO. Here are some of the most significant benefits:
- Overcomes challenges: a PEO can help you with tax compliance issues, employee management, and payroll administration.
- Integration: PEO integrates with HR software, enabling seamless handling of various HR functions, such as benefits, 1099 reporting, and employee time-off approvals.
- Employer of Record: in locations where your business lacks an entity, the PEO can act as the EOR, facilitating expansion across borders.
- Benefits Packages: a PEO allows smaller companies to offer higher levels of benefits to employees, making them competitive with larger businesses without the extra cost or management.
How much does a PEO cost?
PEO services run the gauntlet of prices. Cost depends greatly on your specific needs. For example, if you need an employee of record (EOR) to take care of global employees, it will cost more. Remote and Papaya Global both offer this service for $599 and $650 per employee per month, respectively.
On the other end of the spectrum, you pay much less for more simplified PEO services. Papaya Global starts at $3 per month per employee, while Rippling begins at $8 per month per user. For contractor management, Remote charges $29 per month per contractor.
Justworks has a simplified plan – no matter the employee type, you pay $59 per month per employee for the basic PEO plan, and it drops to $49 once you employ 50 employees or more.
In real-time examples, we recently surveyed small business owners and HR professionals on PEO services. Those we spoke with confirmed the accuracy of these prices. Participants told us they pay roughly $700 (or $350 per employee) to $30,000 (or $100 per employee) per month.
PEO features to look for
According to our recent PEO survey, the biggest reported PEO feature that most small businesses use is payroll processing, followed by employee onboarding, benefits administration, PTO tracking, and time tracking. Justworks handles payroll processing and benefits administration, while Paychex PEO is an excellent example of a PEO that does hiring and onboarding.
“Paychex is an all-in-one. We use it for hiring and recruiting as well as onboarding new employees,” says an HR Director we recently spoke with in our survey.
Other key features include dedicated HR administrative services, compliance and risk management, and employee training and development. Our research into Deel shows it offers many compliance management tools.
When selecting a PEO, assess your business needs and ensure that your chosen vendor aligns with your goals and preferences in these critical areas. “Research and evaluate multiple PEO service providers to find the one that best aligns with your organization’s needs,” recommends another small business owner who took our PEO survey.
Professional Employer Organization (PEO) Frequently Asked Questions (FAQ)
What Is a Certified PEO?
A certified professional employer organization or CPEO is an IRS-certified PEO after meeting comprehensive background, financial, and reporting requirements. As a CPEO, it takes over the federal payroll taxes and filing responsibilities.
What is the purpose of a PEO?
The primary purpose of a Professional Employer Organization (PEO) is to provide small and mid-size businesses with extensive HR solutions. By outsourcing HR tasks like payroll processing, benefits administration, risk mitigation, and compliance management, PEOs allow your HR team and business to focus on core operations while sharing employer responsibilities and leveraging the expertise of the PEO in managing human resources.
Is a PEO worth it for a small business?
As a small business, a PEO is beneficial. With limited resources, HR can take a significant amount of your time, and having a full-service HR system has many benefits that will far outweigh any reason not to. A PEO can streamline HR processes, provide access to better benefits, provide compliance support, and overall increase your employee experience and retention.
What size company should use a PEO?
Any size company can benefit from a PEO, but they tend to be most beneficial for small and medium-sized businesses. Typically, companies with a headcount ranging from 10 to 500 employees find PEO services particularly advantageous.
Small businesses, in particular, benefit from outsourcing HR functions, as PEOs can provide cost-effective solutions for payroll processing, benefits administration, and compliance management. Larger companies with more extensive resources might be able to handle these functions in-house, but the decision ultimately depends on your business needs, priorities, and growth plans.
Methodology: How we chose the best PEO services for small business
PEO services for small businesses are a tricky assessment. Not all vendors provide the same features, so picking one that provides the features you want is the focus. In this guide, we took a deep dive into 24 PEO vendors and decided on seven that hit as many necessary features as possible.
Our research included an online study of each vendor’s website, collecting pricing information, and one-on-one comparisons of similar features from each vendor.
We used our proprietary rating system and scored each vendor 1 (poor) to 5 (excellent) on four key areas – each accounting for 25 percent of the vendor’s final score. Our critical criteria include:
- Brand reputation: our impression of providers isn’t all that matters. We looked at customer reviews and spoke to experts about their experience with the vendors on our list in order to gather the whole picture.
- Features: include applicant tracking, benefits administration, employee onboarding, payroll processing, and tax compliance. While not all providers meet all these features, those that meet the most HR tasks meet the most business needs and carry a higher rating.
- Onboarding and support: we want you to get your PEO system up and running quickly, so we studied how easy the platform is to set up and get started.
- Pricing and transparency: pricing can be tricky, and while we understand that some industry-specific services are naturally more expensive, to provide you with an accurate comparison, we emphasized transparency regarding pricing and fees.
About the Authors
Raechel Conover
Senior Writer, NAWBO Expert Reviews
Raechel covers HR, finance, technology, and small business software for the NAWBO Expert Reviews Team. As an experienced journalist and small business owner, she is passionate about helping entrepreneurs make informed purchasing decisions.
Jamie Ostroe
Editor, NAWBO Expert Reviews
Bringing more than a decade of editorial experience to the NAWBO Expert Reviews Team, Jamie is dedicated to ensuring articles are accurate and helpful. Her experience running a small business inspires her to help others choose the best products for their unique business needs.