If you are currently with a PEO, you are familiar with co-employment. This simply means that your employees fall under the Federal Employer Identification Number (FEIN) of the PEO. For those of you who are not currently with a PEO, this is a key component to how a PEO works. They provide a bundle of services from employee benefits to workers’ compensation insurance, just like an ASO, but they take on the many liabilities under their FEIN. Additionally your company benefits off of the buying power of a much larger group.

This can be advantageous to some companies but depending on the proposal offer from the vendor, this could cost your company thousands. Knowing how to analyze the deal can become tricky if you are not well versed in PEO and ASO proposals. This is specifically true regarding what they are going to charge your company for FUTA/SUTA, workers’ compensation, benefits and administrative charges.

Because of this, meeting with an expert who has been in the industry for years and has multiple relationships with both PEOs and an ASO is a great idea. You can connect with one by clicking here.

Under the ASO model, there is no co-employment, the employees stay under your company’s FEIN. Many times this is a better arrangement for companies as an ASO’s charges are much more transparent than a PEO’s. If your company is currently with a PEO, you may not even be aware of how much they are really charging you for their services. You may not know that your company isn’t receiving Section 125 ER FICA tax savings. Not having your employees under another FEIN gives you the ability to see exactly what you are spending when it comes to payroll taxes and other fees.