What does PEO stand for?

PEO stands for professional employer organization. It is a firm that co-employs your workforce inside an entity you already own and administers payroll, benefits, tax filings and HR compliance on your behalf.

What is the difference between a PEO and an EOR?

A PEO co-employs staff inside your existing legal entity and you remain the legal employer. An EOR becomes the sole legal employer and requires no entity of yours in that country. If you have no entity abroad, a PEO cannot help you hire; you need an EOR.

Do I need a legal entity to use a PEO?

Yes. Co-employment attaches to an entity that is already registered as an employer in that country. Without one there is nothing for the PEO to co-employ into, which is why entity-less international hires go through an EOR instead.

How much does a PEO cost?

Plan for gross salary plus statutory employer burden of 10% to 75% of gross, plus the PEO administration fee, charged per employee per month or as a percentage of payroll, plus the cost of whichever benefit plans you select.

Is a PEO cheaper than an EOR?

The administration fee is lower, but that comparison only holds if you already own and maintain the entity. Once you add incorporation, statutory accounting, local directors and annual filings, an EOR is cheaper below 15 to 25 employees in a country.

Can I use a PEO in Latin America?

Yes, in markets where you already have a registered entity. PEO-style administration is common in Mexico, Colombia, Brazil, Chile and Argentina. Where you have no entity, the same headcount is employed through an EOR instead, and both models can run side by side.

Does a PEO remove my employment liability?

No. Co-employment allocates specific obligations to the PEO, such as payroll accuracy and filings, but you remain the employer with respect to your staff. Full transfer of employment liability is an EOR arrangement, not a PEO one.

Definition

What is a PEO?

A PEO (professional employer organization) is a firm that co-employs your workforce inside a legal entity you already own. You stay the legal employer and keep directing the work, while the PEO administers payroll, tax filing, benefits, HR compliance and employment paperwork under a co-employment agreement. The critical limit: a PEO cannot hire for you in a country where you have no entity. That is what an employer of record does.

Produced by SILA Workforce Intelligence · Reviewed by SILA LATAM Delivery Practice · Updated 2026-08-21

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In one line

A PEO runs HR and payroll inside an entity you already own. An EOR is what you use when you do not own one.

Also written as: PEO, professional employer organization, co-employment, global PEO
Entity required: Yes, always, in the country where the staff are employed
Typical cost shape: Gross salary + 10% to 75% statutory burden + administration fee

The big picture

What a PEO fixes, and the one thing it cannot

A PEO solves the operating burden of employing people somewhere you already exist. It does nothing about the harder problem of employing people somewhere you do not.

You have an entity but no local HR function

The PEO supplies the payroll, benefits and HR compliance machinery you would otherwise have to hire and maintain in-country.

Payroll filings keep slipping

Gross-to-net, withholding, social security and statutory filings become someone's contracted obligation with a calendar behind it.

Benefits are expensive at your headcount

A PEO pools employees across clients, so small teams can access plans priced closer to large-employer rates.

Local labor law keeps changing

Notice, severance, 13th month, vacation and profit-sharing rules are tracked and applied by the PEO instead of your finance team.

You bought a PEO and it cannot hire your candidate

That is the classic misfire. No entity in that country means no co-employment. You need an EOR for that hire, and a PEO only where you already operate.

Some countries have an entity and some do not

Mixed footprints need both models running side by side under one operator, so the employment structure is chosen per country, not per vendor.

The practical rule: entity in country, PEO is on the table. No entity in country, only an employer of record can employ the person. Most LATAM expansions need both at once.

What a PEO actually does

Administers payroll

Gross-to-net calculation, payslips, disbursement and payroll tax filings on your entity's registrations.

Sponsors and manages benefits

Health, pension and supplementary plans, on pooled rates you could not access alone.

Handles HR compliance

Contracts, handbooks, statutory notices, leave tracking and record retention to local standard.

Shares defined employment risk

Co-employment splits specific obligations, but you remain the employer of record for your staff.

Supports onboarding and offboarding

New-hire registration, documentation and final settlement calculations.

Reports on workforce cost

Consolidated employer cost per head, including burden and accruals, in one place.

What a PEO does not do

•Employ people in a country where you have no legal entity. Only an EOR can do that.
•Recruit or source candidates. That is staffing or recruitment.
•Remove your liability as the employer. Co-employment shares obligations, it does not transfer them.
•Fix a misclassified contractor population retroactively.

PEO vs EOR vs payroll vs staffing

Pick by what you are missing: an entity, a legal employer, the person, or the administration around them.

Model	Who is the legal employer	Local entity required	Time to live	Best when
PEO (co-employment)	Shared, you remain the legal employer	Yes, required	2 to 4 weeks	You already operate in the country and want HR, payroll and benefits administered
Employer of Record (EOR)	The EOR is the sole legal employer	No	5 to 10 business days	You have no entity and need 1 to 20 people employed compliantly
Payroll bureau	You, fully	Yes, required	2 to 4 weeks	You have local HR and only need calculation and filing
Staffing / staff augmentation	The staffing firm	No	2 to 4 weeks to placement	You need the person found and delivered, not only employed
Own local HR team	You, fully	Yes, required	2 to 4 months to staff	Large, permanent in-country headcount with ongoing complexity

Side-by-side on the decision that matters most: EOR vs PEO. Commercial detail: PEO services in Latin America.

What a PEO costs

Compare landed monthly cost per head, including the cost of keeping the entity alive.

Gross salary

Paid on your entity's payroll at the local market band.

Statutory employer burden

Mandatory employer contributions, 10% to 75% of gross depending on the country.

PEO administration fee

Per employee per month, or a percentage of payroll. Lower than an EOR fee because you carry the entity.

Benefit plan cost

Priced on the pooled plan you select, separate from the administration fee.

Country salary bands and statutory burden are published free in the LATAM Workforce Index.

Employment support by country

Contribution rates, notice periods and benefit norms differ sharply by market. Start with the country you employ in.

PEO FAQ

PEO or EOR for your next hire?

Tell us the country, the headcount and whether you have an entity there. We come back with the right structure, the landed monthly cost per head and a confirmed start date.