Short answer: A Professional Employer Organization co-employs your staff and lets a small business access large-group benefits, payroll, and HR through the PEO. It can mean richer plan options, but you’re tied to the PEO’s plans and pricing.
A PEO enters a co-employment arrangement with your business: your employees become part of the PEO’s larger group for benefits, payroll, workers’ comp, and HR administration, while you keep day-to-day management. The upside is access to large-group health plans and economies of scale a small employer couldn’t get alone, plus offloaded HR/compliance work. The trade-offs are cost (administrative fees), less control over plan design, and potential disruption if you leave the PEO and have to find replacement coverage. PEOs suit small employers that want turnkey HR plus benefits.