Payroll software (Gusto, ADP RUN, Paychex Flex, Justworks Payroll) handles payroll processing, tax filing, and basic HR. A PEO does all that plus co-employment, bundled benefits, workers comp pool placement, and deeper HR support. The right choice depends on how much HR + benefits + comp you need bundled vs. unbundled.
| PEO | Payroll-only | |
|---|---|---|
| Payroll processing | Included | Included — typically the core feature |
| Group benefits at pool rates | Yes — master plan pricing | No — you broker your own |
| Workers comp pool placement | Yes — master policy | No — separate WC arrangement |
| HR advisor support | Yes — included | Typically not (or basic only) |
| Pricing | $200–$400 PEPM all-in | $40–$120 PEPM (payroll only) |
| Best fit | 10+ employees wanting benefits + HR | Any size — fits simple payroll needs |
PEO wins when: you want benefits and workers comp bundled at pool rates, you want HR advisor support, you operate multi-state, or you don't want to manage benefits carriers separately.
Payroll-only wins when: you're under 10 employees, you don't offer group benefits (or already have an existing broker relationship), or you have in-house HR that doesn't need PEO advisor support.
Below 10 employees, payroll-only is almost always cheaper. Above 25, PEO economics typically work out. The 10–25 range is the genuine decision band — depends on benefits ambitions and workers comp exposure.
PEO wins when: you want benefits and workers comp bundled at pool rates, you want HR advisor support, you operate multi-state, or you don't want to manage benefits carriers separately.
Payroll-only wins when: you're under 10 employees, you don't offer group benefits (or already have an existing broker relationship), or you have in-house HR that doesn't need PEO advisor support.
Below 10 employees, payroll-only is almost always cheaper. Above 25, PEO economics typically work out. The 10–25 range is the genuine decision band — depends on benefits ambitions and workers comp exposure.
All PEO comparison guides — every alternative we cover side-by-side.
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