The fundamental difference
A payroll company processes your payroll. You remain the sole employer, file taxes under your own FEIN, buy your own workers' comp policy, and shop your own benefits. That's the model behind tools like ADP RUN, Paychex Flex, Gusto, and many others.
A PEO goes substantially further — through co-employment, the PEO becomes the administrative employer of record. Payroll runs through the PEO's FEIN, workers' comp is often placed through a master program with pay-as-you-go billing, and benefits are typically pooled across the PEO's full client base. You retain full operational control of your business; the PEO handles the back office.
Side-by-side comparison
| Factor | PEO | Payroll Company |
|---|---|---|
| Employer of record | Co-employment with PEO | You remain sole employer |
| Workers' compensation | Often through PEO master program (pay-as-you-go) | You buy direct or through a broker |
| Group benefits buying power | Pooled across PEO's whole client base | Limited to your headcount |
| HR consulting & policy support | Typically included with named consultant | Usually not included; available as add-on |
| Payroll tax filings | Filed under PEO's FEIN | Filed under your FEIN |
| State unemployment account | PEO's account | Your account |
| Onboarding speed | 10–45 days typical | Days |
| Best for | 5–500 employees, complex comp, benefits-driven | Simple needs, prefer to keep tax IDs |
| Per-employee admin cost | $40–$160 PEPM | $8–$45 PEPM |
| Total cost to employer | Often lower with comp + benefits factored in | Lower admin, higher comp/benefits separately |
When the payroll-company route wins
- You have fewer than 5 employees.
- Your workers' comp is already cheap and you have clean loss runs.
- You don't offer benefits, or you have a benefits plan you're committed to keeping.
- You want to keep your own FEIN and state accounts for banking, contracts, or strategic reasons.
When the PEO route wins
- You're in construction, staffing, manufacturing, or any industry with meaningful workers' comp exposure.
- You want benefits comparable to what large employers offer — not what a 30-employee group can buy directly.
- HR is being handled part-time by an office manager and starting to break.
- You operate in multiple states or are growing fast.
The honest middle ground
For many Florida employers, the right answer is to price both — get a real PEO quote and compare it against your current payroll + comp + benefits stack. The math is rarely obvious from the outside. We help Florida employers run that comparison for free.