By What does a PEO typically share with you?
Benefits administration, COBRA paperwork, help filing claims, handbooks, and keeping you compliant with the local, state and federal laws the PEO is aware of for your business. Paychex's PEO page, for example, describes responsibility for admin tasks like payroll and benefits as shared while the business keeps control of daily operations, and says the PEO files payroll taxes under the PEO's employer identification number.
There are state-by-state nuances in how payroll taxes get reported, and most of the answers are in the service agreement. If you're in the final stages, read that agreement with a fine-tooth comb.
What should a PEO show you in writing about responsibilities?
Ask each PEO to show you, in writing:
- Who handles payroll tax filings?
- Who administers benefits?
- Who owns which compliance tasks?
- Who handles workers' comp claims?
- Who responds when an employee issue comes up?
- What does your team still have to report to the PEO?
The better fit isn't automatically the PEO that says it does more. It's the one whose split matches what you want to keep and what you actually need help with.
What service questions should you ask a PEO?
"We provide great service" isn't enough to decide on, because both companies sell a service, not just software. Paychex lists PEO support roles like a client advocate, an HR business partner and a payroll specialist, plus safety support for eligible workers' comp clients. Insperity positions HR360 around HR expertise, routine admin support and long-term people strategy. A lot of the industry says "long-term people strategy" without meaning it; in Steve's experience Insperity actually delivers it, which is a big part of why it can charge what it does. It isn't always more expensive, but clients sometimes get sticker shock.
Ask both providers:
- Who is our primary contact, and what do they own?
- Who handles payroll? Benefits corrections? Employee relations?
- Who helps when we expand into a new state?
- Are specialists assigned to us, or shared across a team?
- How often do we meet proactively, versus us reaching out when something breaks?
- If our primary contact leaves, what happens?
Choose on how the service model is designed and written into the proposal, not on the promise of personal service.
Why ask a PEO about leaving before you join?
Not because you plan to leave, but because the answers show what the PEO truly owns versus what you do. Ask both providers the same questions:
- What information can we export, and in what format?
- How much history stays available?
- What happens to employee benefits, workers' comp coverage and open claims?
- What happens to payroll tax reporting?
- What employee communications will be required?
- What transition support is included, and when would the change need to happen?
Switching PEOs can be managed, but it touches payroll, benefits, deductions, tax filings, HR records, insurance, systems and employee communications. The exit shouldn't decide the purchase, but you should understand it before you sign.
Adapted from Steve's video Paychex vs Insperity: How to Review the Two Models, chapters 2:35-6:17 and 10:39-11:38.
Common questions
Does a PEO become my employees' employer?
It becomes a co-employer for specific functions. You still control hiring, firing, pay and daily work, and the liability comes back to you.
Whose tax ID does a PEO use for payroll taxes?
In Paychex's PEO model, payroll taxes are filed under the PEO's employer identification number. Check how each provider handles it in your states.
What should I ask a PEO about service?
Who your primary contact is and what they own, whether specialists are assigned to you, how often you'll meet proactively, and what happens if your contact leaves.
Why ask about leaving a PEO before joining?
The exit answers show what the PEO owns versus what you own, and how disruptive a future change would be.
Steve Taylor, founder of Thinq HR & Insurance Services, has 15 years in employee benefits, HR, payroll, PEOs and insurance, including time inside Paychex, ADP and TriNet.