Professional employer organization
In accounting, professional employer organization means a firm that co-employs a client's staff and runs payroll, benefits and HR under its own EIN for a fee. Only a PEO the IRS has certified (a CPEO) is generally treated as the employer for employment tax on the wages it pays.
Also called PEO, CPEO.
Authority: IRS Pub. 15 (2026), §16 (opens in a new tab). Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- payroll provider
- employer of record unqualified
Also in Payroll
Defined in Lexicon. This page is generated from that document, so the two can't disagree.