The PEO issues the paycheck, but you pay the wages, taxes, and employer portion of benefits. Since the PEO is the employer on paper, they handle registering for state agencies and tracking compliance laws. And because PEOs can pool all of their client-employees, you get access the more affordable and flexible large-group benefits.

Many companies with fewer than 200 people will literally sign away legal control of their employees and pay multiple times more for payroll services. Just so they don’t have to think about state tax settings.

Running the People side of your business takes a lot of work, but hiring a PEO comes with trade-offs that you may regret later.