The primary distinction between a PEO (Professional Employer Organization) and payroll lies in the scope of services provided. While payroll solely focuses on managing employee wages, taxes, and deductions, a PEO offers a broader range of HR-related services, including benefits administration, compliance assistance, HR consulting, risk management, and employee training, in addition to payroll processing.

A PEO can help businesses save time and resources by outsourcing HR functions, allowing them to focus on core operations. PEOs also provide expertise in HR compliance, access to better benefits packages, and improved risk management.

PEOs often have access to a wider range of employee benefits options, including health insurance, retirement plans, and other voluntary benefits, which they offer to client businesses under a co-employment arrangement.

PEO costs typically involve a service fee based on factors such as the number of employees and the scope of services provided. It's important to discuss pricing and fee structures with potential PEO partners to understand the total cost.

When a business partners with a PEO, they enter into a co-employment relationship, where the PEO becomes the employer of record for tax and benefits purposes while the client business retains control over day-to-day operations and management of employees.

Payroll is important for ensuring employees are accurately compensated and that taxes and other deductions are properly managed. It also involves maintaining accurate records for compliance and reporting purposes.

Payroll is the process of managing employee wages, taxes, and deductions within a company.