PEO (Professional Employer Organization)
A PEO (Professional Employer Organization) enters a co-employment arrangement with your company: your existing legal entity remains the worksite employer, while the PEO becomes the administrative employer of record for payroll taxes, benefits and HR compliance. By pooling many clients’ employees, PEOs buy benefits at rates small companies can’t get alone. It’s a predominantly US model.
PEO vs EOR — the decision in one line
You can only use a PEO where you already have an entity. An Employer of Record exists for the opposite case — hiring in a country where you have no entity at all, with the provider as sole legal employer.
| PEO | EOR | |
|---|---|---|
| Your local entity required | Yes | No |
| Employment relationship | Co-employment | Provider is sole employer |
| Typical use | US SMBs outsourcing HR/benefits | International hiring |
| Worker types | Your employees | Employees abroad |
The two get conflated because several vendors sell both. For international hiring the comparison that matters is between EOR providers — see our EOR rating; contractors are a separate track via COR or contractor management.