Administrative Services Organization
Encyclopedia
An administrative services organization (ASO) is an organization that provides outsourced solutions to meet the administrative and HR needs of the client with the client retaining all employment-related risks and liabilities. The term ASO was established by the PEO industry
in the late 1990s in order to distinguish between selective administrative support and full-scale PEO services. The principal difference between the two types of service is that, in an ASO arrangement, the employer remains the employer of record for tax purposes not a co-employer. Ultimately, with this structure, tax and insurance filings are done through the administrative firm, but under the client company’s employer identification number. All W-2 and Workers Compensation policies remain the responsibility of the employer not the administrative firm.
Administrative services can include the following; payroll processing, payroll administration, benefits administration, and corporate benefits. (ASO Vs. PEO services)
. Most business operations are not prepared for the administrative duties involved with running a business. The knowledge and capabilities of small- to mid-sized business are usually limited to occupational expertise, not legal or administrative expertise.
One of the most significant advantages of using an ASO is to benefit from cost saving techniques and bargaining abilities that they can provide due to their large number of workforce employees.
Professional employer organization
A professional employer organization is a single source provider of integrated services which enable business owners to cost-effectively outsource the management of human resources, employee benefits, payroll and workers’ compensation and other strategic services, such as recruiting, risk/safety...
in the late 1990s in order to distinguish between selective administrative support and full-scale PEO services. The principal difference between the two types of service is that, in an ASO arrangement, the employer remains the employer of record for tax purposes not a co-employer. Ultimately, with this structure, tax and insurance filings are done through the administrative firm, but under the client company’s employer identification number. All W-2 and Workers Compensation policies remain the responsibility of the employer not the administrative firm.
Administrative services can include the following; payroll processing, payroll administration, benefits administration, and corporate benefits. (ASO Vs. PEO services)
- Payroll servicesPayrollIn a company, payroll is the sum of all financial records of salaries for an employee, wages, bonuses and deductions. In accounting, payroll refers to the amount paid to employees for services they provided during a certain period of time. Payroll plays a major role in a company for several reasons...
include- W-2 processing, tax filing services, direct deposit, wage garnishment, new hire reporting, standard & custom reports, HRIS, expense reporting, employee time & attendance, paycards, pay as you go workers comp, 401(k) administration, & unemployment Cost Control.
- Benefits administrationEmployee benefitEmployee benefits and benefits in kind are various non-wage compensations provided to employees in addition to their normal wages or salaries...
includes- managing COBRA, H.R.A./ H.S.A.s, FSAs & transit pre-tax plans, bill payment/ premium reconciliation, & benefits enrollment
- Corporate benefits include- organizing/ negotiating health insurance, group dental, STD, LTD, life, etc
Benefits
The benefits of an ASO are not easily quantifiable. Administrative firms performing ASO duties conceptually save business owners time/money through economies of scaleEconomies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
. Most business operations are not prepared for the administrative duties involved with running a business. The knowledge and capabilities of small- to mid-sized business are usually limited to occupational expertise, not legal or administrative expertise.
One of the most significant advantages of using an ASO is to benefit from cost saving techniques and bargaining abilities that they can provide due to their large number of workforce employees.