PEO or ASO Solutions Can Help in These Economic Times

Updated: September 04, 2009

HR Administration, Personnel Office, Payroll, or Benefits Administration, it may be referred to by many different names, but the task to administer to the needs of your employees is a very tedious, expensive, and labor intensive job. If Human Resources has become an overwhelming chore, don't despair, Professional Employer Organization (PEO) and Administrative Services Organization (ASO) are 2 approaches that can help you get back to the business of running your company.

Say you are the owner of a small or medium size firm. All things being equal, your business should be humming along right now. However, it seems that more and more of your attention is diverted to HR Administration details such as accounting, making payroll, or insurance, rather than growing your business. If you are in this situation, Professional Employer Organization is perhaps one option that's worth investigating.

Here's how it works, Professional Employer Organization (PEO) are co-employment firms. PEOs are third party firms who specializes in HR Administration such as accounting, payroll management and benefits administration. The PEO become the employer of record for your employees with it's own tax ID number. The PEO handles all the HR Administrative duties while you, as the client company owner, continues to direct the employees' day-to-day activities. PEOs are paid as that they take a percentage of the payroll between 3 to 15% of the total payroll.

PEOs work with many companies in this manner so they can get the best rates for insurance and benefits packages because of the economy of scale. Here are some other benefits in working with a PEO:

  • Your company can share employment related liabilities through this co-employment arrangement.
  • Workers' Compensation is no longer a risk to your company since the PEO is the employer on record.
  • Outsource Payroll take on the administrative burden of payroll processing, HR support and benefits administration
  • PEOs gain access to Fortune 500 style benefits for your company at large-group savings
  • HR expertise with professionals who have extensive HR administration best practice, regulatory and compliance knowledge
  • In some case, the PEOs can do the recruiting, hirinf and firing of employees on your behalf.

However, if a company is not prepared for such a major undertaking, then there is another option which is the Administrative Services Organization (ASO) solution. An ASO is capable of doing all the Human Resources activities that a PEO can do but it does not require the administrative company be the employer of record for the employees. The added bonus is that the client company can pick and choose ala carte Human Resources tasks to outsource. One other difference between a PEO and an ASO is that the PEO is paid by an agreed upon percentage of a company's gross income while ASO will charge a straight fee for their Human Resources administrative services.

Here's how Administrative Services Outsourcing (ASO)s can help your business:

  • Take on the administrative burden of payroll processing
  • Provide benefits administration and support
  • Gain access to consultants with employee benefits plan
    management expertise
  • Leverage leading-edge technology solution
  • Gain access to industry expert HR professionals
  • Implement HR Best Practices
  • Most Administrative Services Outsourcing (ASO)s will have a HRIS Management System which allows the client company to access up-to-date personnel data at any time.

HR Administration firms such as Astra HR, http://astrahr.com, a Washington Post 100 firm, combine an integrated, single source technology solution delivering efficiencies across all aspects of HR management. Clients can outsource some or all human resources functions, or simply enhance existing support capabilities. Either way, a PEO or ASO solution provides companies with relief from administrative burdens. Both PEO and ASO are good options which enable you to focus on your core business competencies, innovation, expansion and ultimately your overall success.

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