Lately, you’ve been considering hiring a PEO or ASO for your company but aren’t sure which to pick. After all, both provide many benefits and disadvantages; you aren’t sure which makes the most sense. Let’s break down this information to ensure you make a smart choice.
The Pros and Cons of PEO Support
The best PEO services provide excellent HR support that covers your needs quickly and efficiently. They work as co-employers to your team and handle insurance shopping and purchasing, tax submission and preparation, HR problems, and other unique support for your business. Working with them provides many pros and cons. Let’s start by examining the benefits:
- Improve Benefits: A PEO can provide access to comprehensive employee benefit plans, including healthcare, life insurance, disability protection, retirement support, and more.
- Ensure Compliance: Employment state and federal laws change constantly, and a PEO can help you stay compliant with these changes and minimize potential legal issues.
- Enhance Efficiency: Rather than worrying about state laws and negotiating with benefits companies, a PEO handles these steps for you to save you time and money.
That said, there are some downsides to working with a PEO. So, while they’re most quite beneficial, here are a few negative things you need to consider before buying a plan:
- Little Flexibility: When you work with a PEO, you will be stuck using their benefits plans because they create unique relationships with companies to provide policies.
- High Fees: Note that a PEO will charge you various fees for their services, which might be harder for some smaller businesses to afford.
- Compliance Concerns: While a PEO can improve your compliance, they’re not infallible. Some may make mistakes and cause problems that you need to manage.
The Pros and Cons of ASO Service
ASO services are administrative only, meaning that they make far fewer decisions for you. However, they also take far less control and keep most of the power in your hands. For many, that benefit makes them a smart decision. If you’re still on the fence, here are the pros of working with an ASO:
- Cost savings are typically transferred to you, which helps make these services far more affordable
- Additional coverage and benefits may be offered beyond what a PEO would normally offer
- Stop-loss protection can keep you safe from unforeseen and expensive damage issues
These benefits are definitely something to consider when shopping for your options here. However, it’s critical to note that an ASO does have many drawbacks, including:
- Losses more heavily impact your profits because your ASO doesn’t help absorb them
- Any deficits you suffer due to an ASO are paid only by you and not the ASO
- Though not as expensive as a PEO, traditional plans may still be better
Clearly, both of these options provide unique benefits for your firm. So, how can you choose? Well, let’s answer that question in the next section to make this process easier for you. Spoiler alert: ultimately, a PEO is likely the best option for most companies.
Choosing Between the Two
While working with an ASO does have advantages if you’re on a low budget, they’re simply not as useful as a PEO. A PEO can take control of so much of your HR and budgeting process that you can ultimately save money and operate more effectively as an organization.
Think about it this way: if you’re not worried about things like payroll, taxes, HR support, and other important (but annoying) tasks, you can focus more on your company. A PEO frees you to improve your grand business strategy and minimize your potential losses at the same time.
The biggest deciding factor here, beyond a PEO’s broader scope, is loss management. If a PEO makes a mistake, they share the loss with you, which can help minimize your expenses. That’s a huge advantage that easily pushes a PEO over the top of an ASO.
Get Help ASAP
If you’re interested in getting a PEO for your company’s needs, it’s important to reach out to a team that understands your goals. Finding a strong PEO provider can help streamline much of your HR demands and ensure that your team handles this process smoothly and efficiently.
