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What does ASO stand for?

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ASO stands for administrative services organization. It handles a business’s HR needs, payroll, employee benefits administration, and employee training services. When working with an ASO, businesses outsource their HR to a party or partner that can carry out certain services and experiences.

Unlike PEOs, ASOs do not provide workers’ compensation and may not have the same HR risk management capabilities. Ultimately, smaller companies may prefer ASOs when they don’t need a PEO and its extended services.

What are some pros and cons of ASOs?

There are several benefits and drawbacks to ASOs, such as:

  • They’re great for smaller companies: An ASO provides smaller companies with professional HR support without needing to sign on for additional services they may not need.
  • They provide flexibility: ASOs are more flexible, especially for companies that want exceptional services but don’t need workers’ compensation or risk management support meant for large enterprises.
  • ASOs have several offerings: ASOs offer flexible services, including payroll processing, HR policy development, benefits administration, risk management support, and consultation. Small businesses can use powerful HR systems without needing to invest in an HR department.
  • Companies can provide medical coverage: ASOs can provide benefits and medical coverage using third-party service providers. This allows businesses to access essential medical benefits without needing to spend time seeking out providers.

The downsides of ASOs is that they do not provide the extensive risk management and workers’ compensation packages as PEOs and they assume less risk.

What are the employer’s responsibilities with an ASO?

Even if partnering with an ASO, employers are still responsible for several duties. These responsibilities include:

  • Complying with HR policies according to laws and regulations
  • Selecting and providing coverage at market rates
  • Maintaining payroll tax liability
  • Potentially maintaining unemployment claims