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PEO 101 · FAQs
PEO questions,
answered in plain English.
Straight answers about what a PEO is, what it costs, how switching works and how PEO Marketplace helps you compare. Can't find your question? Ask us.
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Costs and fees
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PEO Marketplace
Well-known PEOs you can compare, including
PEO basics
How PEOs work,
answered simply.
Reviewed by PEO Marketplace, a licensed Florida insurance agency (#L129491). Last updated October 2026.
What is a PEO?
A PEO (professional employer organization) is a plug-and-play HR back office. It handles payroll, payroll taxes, health benefits, work comp and HR compliance for small and mid-size businesses, while you keep running your company and managing your team. Read the full guide: what is a PEO.
How does a PEO work?
You and the PEO share employer duties. You keep hiring, managing and running the business. The PEO runs payroll, files payroll taxes, provides health benefits and work comp, and helps with HR compliance. Wages, taxes, benefits and the PEO's fee come together on one invoice each pay period.
What does co-employment mean?
Co-employment means you and the PEO share certain employer responsibilities. You still hire, fire, set pay and direct the work. The PEO handles payroll, tax filing, benefits and some compliance duties. Your employees keep working for you; the PEO's name simply appears on payroll and benefits paperwork.
Will I lose control of my business?
No. A PEO doesn't own your company or tell your team what to do. Hiring, firing, pay rates, schedules and day-to-day decisions stay with you.
Who is a PEO a good fit for?
Businesses with roughly 5 to 500 employees that spend too much time on payroll and HR, want better benefits to hire and keep people, are watching insurance renewals climb, or have employees in more than one state.
What's the difference between a PEO and a payroll company?
A payroll company pays your people and files payroll taxes. A PEO does that too, and adds health benefits, work comp, HR experts and compliance help on one invoice. If payroll is your only headache, a payroll company may be enough.
Is a PEO the same as a staffing agency?
No. A staffing agency finds and supplies workers. A PEO doesn't recruit your team. It supports the employees you already have and the ones you hire yourself, with payroll, benefits and HR help.
Is a PEO the same as HR outsourcing (an ASO)?
Not quite. An ASO (administrative services organization) handles HR and payroll administration, but you stay the only employer and buy your own benefits and work comp. A PEO becomes your co-employer, which is what gives you access to its pooled benefits and work comp.
Costs and switching
Costs, fees
and switching PEOs.
How much does a PEO cost?
Most PEOs charge either a flat fee per employee per month or a percentage of total payroll, on top of the actual cost of wages, taxes, benefits and work comp. Prices vary by PEO, industry and location, so compare quotes side by side. For an estimate, try our PEO calculator.
Are there hidden fees with a PEO?
There can be. Watch for setup fees, technology fees, per-employee add-ons, markups on work comp or benefits, and exit fees. Ask for every fee in writing and compare quotes in the same format. Here's what to negotiate before you sign.
Will a PEO lower my health insurance costs?
It can, but not always. A PEO's large pooled plan often gives small teams more plan choices and steadier rates, but results depend on your team, location and the PEO. Comparing actual quotes is the only way to know.
How does work comp work with a PEO?
Work comp is usually included in the PEO's master policy and billed with each payroll, so you pay as you go instead of paying a large deposit up front. The PEO also helps manage claims.
What is PEO underwriting?
It's the review a PEO does before it accepts your business and sets your price, much like a mortgage pre-approval. It looks at your team's health profile, job types and work comp claims history. See PEO underwriting explained.
How long does it take to switch to a PEO?
Plan for a few weeks to gather documents and compare quotes, then a few more to set up payroll and benefits. Starting at the beginning of a quarter or around your health renewal usually makes the move smoother.
Can I switch PEOs mid-year?
Yes, with planning. Check your current contract's notice period and exit fees, line up health coverage so there's no gap, and confirm how year-to-date payroll and deductibles will carry over.
Can I leave a PEO if it isn't working?
Yes. Most PEO contracts let you leave with notice, but notice periods and fees vary. Read the exit terms before you sign so there are no surprises later.
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About PEO Marketplace
How PEO Marketplace
helps you compare.
What is PEO Marketplace?
PEO Marketplace is a vendor-neutral marketplace where businesses compare 40+ vetted PEOs side by side, using the same tools expert PEO analysts use. We're a licensed Florida insurance agency (License #L129491) that specializes only in PEO, and we were named a Top U.S. PEO Brokerage of 2026 (#6).
Is it free to compare PEOs with PEO Marketplace?
Yes. Comparing PEOs with our team is free for businesses. Like a recruiter, our fee is paid by the PEO you ultimately choose. The platform itself is free for the first 50 businesses during the beta, with paid plans announced at launch.
How does PEO Marketplace work?
Tell us about your business, including headcount, states, industry and what you need. We match you with vetted PEOs that fit, show their quotes side by side with every fee decoded, and you choose. If you need a PEO right away, our team can help you through it.
How are the PEOs vetted?
Every PEO is screened for accreditations, BBB status and client NPS scores before it joins the marketplace.
What industries do you work with?
Most industries, including construction, roofing, landscaping and tree care, healthcare, retail and hospitality, warehousing and logistics, technology and professional services. We also help higher-risk industries find PEOs that accept their work.
What is the $500 savings guarantee?
If you're already on a full-service PEO today (PEO plus health insurance and work comp), we guarantee savings of $500 per employee per year when you compare through us.
Is my data secure?
Yes. We use AES bank-grade encryption and HIPAA-aware practices when collecting and sending your information.
Can brokers, advisors or PEOs work with PEO Marketplace?
Yes. Benefits brokers, accountants, HR consultants, financial advisors and payroll bureaus can bring PEO comparisons to their clients through our partner program, and PEOs can join the marketplace.
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