Glossary · PEO basics
PEO vs. Payroll-Only Provider
The structural distinction between a PEO (co-employment, bundled HR, benefits, and compliance) and a payroll bureau (transactional payroll only).
Payroll-only providers process pay runs, file taxes, and produce W-2s under the client's FEIN. They do not enter co-employment, do not sponsor master health plans, and typically do not provide HR or compliance support.
Employers comparing options should map needs explicitly: payroll-only is appropriate for mature HR teams that want only transactional support; PEOs are appropriate for organizations that want to consolidate HR, benefits, and compliance.
Related terms
- PEO (Professional Employer Organization)A PEO is a firm that co-employs a client's workforce to deliver payroll, benefits, HR, and compliance services under a shared-employment arrangement.
- ASO (Administrative Services Organization)A service model that handles HR, payroll, and benefits administration without entering a co-employment relationship.
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