PEO means Professional Employer Organizations. A PEO provides human resources services for small business clients by paying wages and taxes as well as assisting with compliance with numerous state and federal rules and regulations. In addition, many PEOs provide workers with access to 401(k) plans, health, dental and life insurance, dependent care and other benefits not typically provided by small businesses.
Who uses a PEO?
PEO clients can include different types of businesses ranging from accounting firms to high tech companies and small manufacturers. A broad range of professionals, including doctors, retailers, mechanics, engineers and plumbers also all benefit from PEO services.
How does a PEO arrangement work?
When contracted with a PEO, the PEO will then co-employ the client's worksite employees. The PEO remits wages and withholdings of the worksite employees and reports, collects and deposits employment taxes with local, state and federal authorities. The W-2 is also issued by the PEO. The client retains the responsibility of business operations, marketing, sales and service.