EOR vs PEO: What's the Difference?

EOR and PEO are both workforce solutions, but they serve different purposes. Understanding the distinction helps you choose the right option for your business.

What is a PEO?

A Professional Employer Organization (PEO) provides HR services through a co-employment arrangement. Your company and the PEO share employer responsibilities. The PEO handles HR administration while you remain a co-employer.

What is an EOR?

An Employer of Record is the sole legal employer of your workers. Unlike a PEO, the EOR takes full employment liability. You maintain operational control without any employer obligations.

Key Differences

| Aspect | EOR | PEO | |--------|-----|-----| | Employment relationship | Sole employer | Co-employer | | Entity requirement | Not required | Required | | Liability | EOR assumes | Shared | | Best for | International hiring | Domestic HR outsourcing | | Scalability | Highly scalable | Limited by entity |

When to Choose EOR

Choose an EOR when:

• Hiring in countries without a legal entity
• Testing international markets
• Need full compliance coverage
• Want to avoid entity setup costs

When to Choose PEO

Choose a PEO when:

• You have a US entity already
• Need domestic HR support
• Want to bundle benefits with larger groups
• Prefer co-employment for control

Cost Comparison

PEOs typically charge 2-12% of payroll. EORs charge flat monthly fees ($199-699) or percentage-based pricing. For international hiring, EOR is usually more cost-effective than establishing entities.