Breaking down two HR solutions to help your team grow with confidence

When you’re building a team, one of the most important decisions you’ll make is how to manage HR services. Some companies opt to establish an in-house HR department, while others outsource these responsibilities to a third-party provider. Two common outsourcing options are Professional Employer Organizations (PEOs) and Employers of Record (EORs).

Both models can reduce administrative burdens, but they are designed for very different situations. For most small and mid-sized businesses in the U.S., a PEO is the more effective, cost-efficient, and practical solution.

What is a professional employer organization (PEO)?

A PEO is a co-employer that provides HR support for your workforce. This option works best if you already have a legal entity in place and want to outsource time-consuming HR functions while maintaining full control of your daily operations.

A PEO can help with:

• Payroll and tax filings
• Benefits administration
• Employment law compliance
• Risk management and workplace safety
• Hiring and termination support

Because a PEO shares liability with your business through a co-employment model, it helps reduce risk and ensures compliance with state and federal employment laws. Most charge either a flat monthly fee per employee or a percentage of payroll.

Related resource:

How a PEO can help with customer service

Why a PEO is a smart choice for growing businesses:

• Streamlines HR functions so you can focus on core operations
• Gives access to competitive benefits and insurance plans at lower costs
• Improves compliance and reduces legal risk
• Helps reduce turnover by offering employees better support and resources

As a Certified Professional Employer Organization (CPEO), PER meets the IRS’s highest standards for compliance, financial stability, and accountability, giving you added peace of mind when outsourcing HR.

What is an employer of record (EOR)?

An EOR becomes the official employer of record for your team in places where you don’t have a legal entity, often in another country. Businesses use EOR services if they want to hire internationally without going through the complex process of establishing a foreign entity.

An EOR takes on full legal responsibility for your employees and manages many of the same HR functions as a PEO, including payroll, taxes, benefits, and compliance. However, you still manage day-to-day decisions such as workloads, pay rates, and performance.

EORs can be helpful for large companies expanding globally. But for most small and mid-sized businesses focused on U.S. growth, an EOR is unnecessary.

PEO vs. EOR: Key differences

Structure

• A PEO acts as your co-employer and shares liability with your business. 
• An EOR is the full legal employer and assumes all liability.

Scale

• PEOs are best for small and mid-sized companies with domestic teams. 
• EORs are geared toward international hiring and global expansion.

Scope

• PEOs provide HR services to companies that already have a legal entity. 
• EORs allow you to hire in places where you don’t.

Services

• Both cover payroll, benefits, compliance, and HR support, but EORs add global hiring, visas, and international compliance.

Cost

• Both charge a flat fee per employee or a percentage of payroll. PEOs are often more cost-effective for businesses operating in the U.S., while EORs prevent the need to set up foreign entities.

Why is a PEO often the better choice for businesses with 10 to 100 employees?

EORs can make sense for international corporations, but for small and mid-sized U.S. companies, a PEO delivers the right balance of compliance, cost savings, and HR expertise. By partnering with a PEO, you gain:

• Relief from time-consuming HR tasks
• Affordable access to employee benefits that help you stay competitive
• Reduced risk of costly compliance errors
• The ability to focus more time and energy on growing your business

At PER, we specialize in helping businesses like yours thrive through CPEO-certified services. That means you not only get the flexibility of outsourced HR but also the assurance of working with a trusted partner that meets the highest compliance standards.

Learn more:

The five best professional employer organization (PEO) services to look for

PEOs and EORs may sound similar, but they serve different business needs. If your company is expanding globally and doesn’t want to establish local entities, an EOR may be the right fit. But for most small and mid-sized businesses in the U.S., a PEO is the smarter, more cost-effective choice.

By working with a Certified Professional Employer Organization like PER, you gain the benefits of streamlined HR, improved compliance, and access to better employee benefits, all while keeping control of your business.

Interested in how we can take care of your PEO needs?

With over 25 years in the industry, our dedicated HR professionals at PER help you with payroll management, workers’ compensation, human resources, benefits administration, and more.

Our team serves businesses in the greater Orlando area, throughout Florida, and beyond.  We will support you as your coach and safety net for HR situations, helping you become more comfortable and confident in your business owner and manager role.  

Ready to get started? 

Contact us today!