HR outsourcing for small business: PEO, ASO, HR software or fractional HR

Four ways to outsource HR

PEO, published price

$79 to $125per employee per month

PEO, industry range

2% to 12%of payroll, or $40 to $160 PEPM

Payroll + HR tools

$113 to $400/mofor 10 people, with payroll

Prices checked

Oct 16, 2026vendor pricing pages

The real choice is who is the employer. A PEO becomes a co-employer and runs payroll under its own tax IDs, which is how it can offer large-group health plans. Everything else leaves you as the only employer and sells you labor, software or advice. Our PEO vs. ASO comparison covers that split in detail.

What HR outsourcing costs for 10 and 25 employees

PEO fees run several times higher than payroll software with HR tools: $790 a month for Justworks PEO Basic at 10 people, against $144 for OnPay with its HR tier. But the fee is not the whole story. The PEO price often replaces a benefits broker, a workers' comp policy and part of an HR hire. To compare fairly, add your current health premiums, workers' comp and broker fees to the software option. Our PEO cost guide shows how to read a PEO invoice line by line.

Quote-only providers

ADP's own guide says PEO fees run "2% to 12% of total payroll or about $40 to $160 per employee per month" across the industry, and that ADP TotalSource includes workers' comp in its service fee (updated July 14, 2026). Insperity says its HR service charge "won't increase if you pay your employees more," and is offering new HR360 clients a credit of up to $425 per full-time employee.

PEO: HR, benefits and payroll under one co-employer

Check that a PEO is on the IRS certified PEO list before you sign. Absence from the list does not always mean uncertified, because some PEOs certify under a different legal name, but the contract must show the CPEO's exact name and EIN. Co-employment terms, liability and costs vary by contract and state, so read the service agreement and get advice on your situation. Rankings are on our best PEO companies page.

ASO: outsourced HR administration, you stay the employer

An ASO runs payroll, benefits administration and HR services, but your company stays the only employer of record and keeps its own tax IDs and benefit plans. "ASO" is an industry term; the IRS does not define it. You keep employment tax liability, and you buy your own health insurance and workers' comp.

No ASO in our research publishes a price. TriNet runs an ASO line (its referral terms list ASO separately from PEO). Paychex HR Pro ("HR Guidance, Payroll, Safety, 401(k)") and ADP RUN HR Pro ("enhanced HR support") are payroll-plus-HR bundles that leave you as the employer, sold by quote; neither vendor calls them an ASO on the pages we read. Ask for the per-employee fee, the setup fee and the term in writing.

An ASO fits when you already have good benefit plans you do not want to give up, or you are too large or too specialized for a PEO's pooled plans. See PEO vs. payroll service for how the cost compares.

Payroll or HR software with HR tools

The cheapest form of HR outsourcing is software that adds HR and compliance tools to payroll. You do the HR work; the software makes it faster. The pricing pages we checked name these HR tiers but do not detail whether a person answers your HR questions, so ask before you buy.

• Gusto Premium: $180 a month plus $22 per person adds HR and compliance tools, premium support and Business Compliance (state registration). See our Gusto pricing breakdown.
• OnPay: payroll at $49 plus $6 per worker, with HR tiers from $15 plus $2 per worker (HR + Time Tracking $21 plus $4; Bundled HR $71 plus $1).
• Patriot: HR add-on at $6 a month plus $2 per employee on top of payroll.
• BambooHR: HR software at $10 per employee a month for Core (its FAQ says $10.25), $17 for Pro and $25 for Elite, or flat $250, $425 and $650 a month for 25 or fewer employees. Its payroll add-on price is not published; payroll is $0 through December 31, 2026 with a 12-month agreement.
• Justworks Payroll at $50 plus $8 per employee is payroll only; HR consulting comes with the PEO tiers.

If HR software is what you need, our HR and payroll software rankings score the all-in-one platforms and HR software for small business covers HR-only tools.

Fractional HR

A fractional HR professional works for you part time, on retainer or by the hour, and handles handbooks, investigations, terminations and hiring processes. You stay the employer and keep your own payroll and benefits.

We did not find published fractional HR prices in our research, so we do not quote a range. If you get quotes, compare the monthly retainer against the cost of a PEO or Justworks' Dedicated HR Consulting add-on ($30 per employee a month on top of the PEO fee, checked October 16, 2026). At 10 employees that add-on is $300 a month.

How to choose

If payroll is the only thing you want off your plate, read payroll outsourcing options and costs instead.

Contracts and how to leave

No PEO in our research publishes its minimum headcount, setup fee or exit terms. TriNet confirms "TriNet does require a minimum worksite employee count" without a number, and says "Most of our contracts offer flexible terms without a long-term contract." Deel's US PEO promotion requires a minimum two-year term, with full list price owed on early termination.

• Ask for the notice period and any transition or early termination fee before you sign. A Gusto competitor guide (August 2, 2026) says Paychex PEO charges a transition fee and an early termination fee by headcount and days left.
• Plan the exit around your health plan year, so employees do not reset deductibles mid-year.
• Map the 401(k) transfer early. Reviewers describe missed employer contributions during PEO 401(k) migrations (TrustRadius, Aug 23, 2026).
• Keep payroll if it works. One ADP TotalSource client wrote "I am keeping the payroll and dumping TS."
• Leaving a CPEO mid-year does not restart Social Security and FUTA wage bases, because the statute treats the customer as a successor employer (26 USC 3511(b)).

Common mistakes

• Comparing a PEO fee to payroll software without adding health premiums, workers' comp and broker fees to the software side.
• Assuming every PEO is IRS-certified. Check the list by exact legal name.
• Missing the PEO renewal date and taking the increase by default. Ask for the renewal well before the date and shop it.
• Not reading who pays for HR mistakes. Advice from an outsourced HR team does not move your legal duties as the employer.
• Buying HR software when the real gap is someone to make judgment calls.