Business of all sizes can utilize the services of a Professional Employer Organization (PEO) provider and many people ask what the differences are between a PEO and CPEO. First, let’s discuss what exactly a CPEO is.
A Certified Professional Employer Organization (CPEO) provides human resource management services to small and medium-sized companies – businesses that aren’t necessarily large enough to warrant an internal HR or payroll department.
A CPEO can help by offering a range of HR services, such as payroll processing, employee benefits administration, workers’ compensation, or even an HR legal department to help maintain compliance with employment laws and regulations. By working with a CPEO, companies can outsource their HR functions and focus on their core business activities.
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Differences Between a PEO and a CPEO
While these types of services are similar to a standard PEO, there are differences between a PEO and CPEO. The most significant difference is that a CPEO is certified by the Internal Revenue Service (IRS) that involves an application and rigorous review process that must meet strict requirements to ensure they are financially stable, have adequate insurance, and meet other regulatory standards.
They must also undergo annual audits and provide financial security to protect their clients in case of default or other financial issues. Working with a CPEO can provide businesses with access to specialized HR expertise, cost savings, and reduced liability risks.
A regular PEO company is not certified by the IRS and they aren’t subject to the same level of oversight. This means that while some regular PEO companies may be reputable and reliable, others may not meet the same standards as CPEOs. Learn more about what is a PEO.
In summary, while both CPEOs and regular PEO companies offer HR services to businesses, CPEOs have undergone a rigorous certification process and provide added protections to their clients.