PEO vs EOR: what is the difference, and which do you need?

The short answer

PEO

US onlyco-employment with your company

EOR

Abroadsole legal employer

PEO fee

$79 to $125per employee per month, published

EOR fee

$199 to $699per employee per month, published

Co-employment vs sole employer

A PEO is a co-employer. Under federal law, a certified PEO contract is one where the PEO pays wages and employment taxes and keeps employee records, while it shares responsibility for recruiting, hiring and firing with you (26 U.S. Code 7705(e)(2)). You keep running the business and your company stays the place the employees work for.

Certification matters for tax liability. For wages an IRS-certified PEO (CPEO) pays, the CPEO “shall be treated as the employer (and no other person shall be treated as the employer)” for federal employment taxes (26 U.S. Code 3511). With a PEO that is not certified, you generally stay liable for your employment taxes. Check a PEO’s exact legal name on the IRS active CPEO list (report date August 7, 2026), or on our certified PEO list.

An EOR is the sole employer. The worker signs an employment contract with the EOR’s local entity. The EOR runs payroll and pays the employer contributions under that country’s law, and you pay its fee plus every employment cost. You direct the work but you are not the employer on paper. More on that model in what an employer of record is and how it works.

US vs international: where each one works

A PEO needs a client company to co-employ with, so it works for US employees of a business that already has a US entity and EIN. It does not employ people in other countries.

An EOR is built for the opposite case: a person in a country where your business has no entity. US companies use EORs to hire in India, Brazil, the UK or Canada. Foreign companies use an EOR to hire their first US employee before they open a US company.

Some US states regulate PEOs. Texas, for example, requires a PEO license even when the PEO has a single covered employee in Texas (Texas Department of Licensing and Regulation).

Cost comparison

Fees side by side for 10 employees. PEO fees are for US staff; EOR fees are for staff in another country, so this compares the service charge only.

Neither number is the full bill. A PEO invoice also carries health premiums, workers compensation and state unemployment tax; TriNet, for example, says premiums are separate from its per-employee fee. An EOR invoice carries salary and the country’s employer contributions, which range from 3.4% of pay in India to 50.9% in Brazil on a salary of about USD 40,000 (official rates in our employer cost index).

Full PEO pricing, including quote-only providers, is in what a PEO costs per employee. Full EOR pricing is in EOR pricing, with deposits and exit costs.

Decision table

Contracts and exit terms

PEO side. Deel’s US PEO promotion credits 3 months of platform fees on order forms with a minimum two-year term signed July 15 to December 31, 2026, and you owe full list price if you end early. That conflicts with Deel’s own FAQ line about “no long-term commitments.” When you leave a CPEO mid-year, the CPEO is treated as successor employer, so Social Security and FUTA wage bases do not restart (26 U.S. Code 3511(b)).

EOR side. Remote’s terms run 12 months and auto-renew, and its order forms raise prices on renewal by at least 8% or US CPI if higher. Multiplier needs 30 days to process a termination and charges a 15% penalty if you contact the employee about termination yourself. Oyster can be ended on 30 days’ notice. Deposits come back about 45 to 60 days after the job ends.

Switching a PEO also means moving benefits and the 401(k); see the best PEO companies for providers and terms. For EOR providers, see the best employer of record services.

Pros and cons of each model

Common mistakes

• Using an EOR for US staff when you already have a US company. A PEO or payroll software costs a fraction of $599 a head.
• Assuming any PEO carries your tax liability. Only a CPEO is treated as the sole federal employer under section 3511. Check the IRS list.
• Expecting a PEO to cover a worker abroad. It cannot; you need an EOR, an entity or a contractor arrangement. See paying international contractors.
• Comparing fees without the pass-through costs. Health premiums on the PEO side and employer contributions on the EOR side are usually bigger than the fee.