The No-BS Guide to PEOs: Are They Right for Your Company?
If you’ve been running a small or growing business, chances are you’ve heard the term PEO tossed around. But what exactly is a PEO, who should use one, and who might be better off with a different solution? Let’s break it down 👇🏼
First, What is a PEO?
A Professional Employer Organization (PEO) is a company that partners with small and mid-sized businesses to handle HR, payroll, benefits, and compliance. When you join a PEO, you enter into a co-employment arrangement: your employees still work for you, but legally they’re also employed by the PEO.
Why does that matter? Because it lets smaller companies “borrow scale"—meaning you get access to things like:
Group buying power on health insurance 💸
Payroll and tax filings handled for you
HR compliance support (no more guessing on labor laws)
Built-in benefits admin systems
Basically, a PEO is like an all-in-one HR department in a box—but with the added bonus of better benefits pricing.
Who Are PEOs Great For?
PEOs are a strong fit for businesses that:
✅ Have 10–200 employees and want to offer benefits that feel “big company" level.
✅ Don’t have a full in-house HR team and need compliance, payroll, and HR support.
✅ Want to offload the complexity of managing multiple vendors (insurance carriers, payroll providers, HR systems).
✅ Prefer simplicity, even if it comes at a premium.
📊 The data backs it up: According to NAPEO, small businesses that use a PEO grow 7–9% faster, have 10–14% lower employee turnover, and are 50% less likely to go out of business compared to those that don’t.
Think of a fast-growing startup or a 50-person construction company that doesn’t have time to manage HR admin—a PEO can be a lifesaver.
Who Might NOT Be a Fit for a PEO?
PEOs aren’t for everyone. Here are some cases where they may not be the best solution:
❌ Larger groups (200+ employees) who can negotiate benefits directly with carriers.
❌ Businesses that want full control and flexibility over their benefits and HR setup.
❌ Cost-conscious groups—PEOs often bundle everything into one bill, which is convenient but not always the cheapest option.
❌ Companies with industry-specific compliance needs (like healthcare or government contractors) that may require specialized HR setups.
💡 As one HR leader put it: “A PEO is like renting HR infrastructure—it’s great when you’re small, but eventually you may want to own the house.”
If your business values flexibility and customization over convenience, you may be better off with a broker + standalone systems instead of a PEO.
The Big Players: Popular PEOs You’ve Probably Heard Of
When people talk about PEOs, a few big names often come up:
Justworks – a modern, tech-first PEO that’s popular with startups.
Rippling PEO – built on Rippling’s HRIS platform, with tons of automation and integrations.
TriNet – one of the largest and most established PEOs, serving a wide range of industries.
ADP TotalSource – backed by payroll giant ADP, with strong compliance and HR support.
Each of these has its pros and cons—pricing, technology, benefits access, and service style all vary. That’s why picking the right one can be tricky.
How JAM Benefits Helps
Here’s the thing: choosing a PEO isn’t always simple. There are hundreds of PEOs out there, and each has different pricing structures, benefits options, and service models.
That’s where JAM Benefits comes in 🎯
We help businesses:
🔹 Decide if a PEO is even the right move—or if you’d be better off with a different setup (like level-funding, ICHRA, or traditional group plans).
🔹 Compare top PEOs side by side, so you actually know what you’re getting.
🔹 Negotiate pricing and structure so you’re not overpaying.
🔹 Transition smoothly if you decide to join one—or leave one.
At the end of the day, our job is to make sure your benefits and HR setup are working for you—not the other way around.
The Bottom Line
PEOs can be a game-changer for small and mid-sized businesses that want to offer competitive benefits and streamline HR. But they’re not a one-size-fits-all solution.
👉🏼 If you’re wondering whether a PEO makes sense for your company, JAM Benefits can help you figure it out—and if it is the right fit, we’ll make sure you find the best one for your needs.
📩 Ready to see if a PEO could work for your business? Let’s talk.