The acronym ASO stands for Administrative Services Organization. Just like it sounds, an ASO can handle administrative tasks for your business. They will typically handle things like:
Outsourcing your HR to an ASO lets you, as the business owner, focus on running your business instead of managing payroll or researching complex tax laws and regulations.
Focus on your business, not HR administration
You didn’t start your business to spend your time running payroll, finding and managing benefits, or researching complex employment regulations. Using an ASO lets you focus on your business, while the ASO handles all of the “back office” work.
Save money on administrative costs
Because an ASO has already created the processes and procedures for processing payroll, managing benefits and other HR tasks, you get the benefit of economies of scale. It’s typically more cost effective for smaller businesses to outsource these tasks instead of hiring, training, and managing their own internal HR teams.
Compliance and tax support
Tax laws and regulations are complex, change often, and typically are different per state. This includes things like overtime rules, tax forms that need to be generated, employee garnishments, taxable wages, and many, many other compliance and tax regulations that would require a full time commitment just to understand. ASOs are experts at employment related compliance and have teams dedicated to keeping up to date with the laws and can make sure you’re staying compliant.
Less control over HR choices
The biggest disadvantage really is that you’re outsourcing most of your HR administration, which means you don’t have control over who they hire, their communication style, and the software they use. So if you are someone who likes to control every aspect of your business, this may cause some friction.
Must bring your own health benefits
If you are a small business, it can be tricky to negotiate good rates for health benefits and workers’ compensation. For example, if you have 5 employees, health benefit options may be limited, whereas if you have 100 employees, you’ll typically be able to find better rates (joining a PEO is an alternative option). This can get expensive and negatively impact your recruiting efforts. Regardless, the ASO will be able to help you through the process of finding health benefits and brokers.
Lack of individual support
ASOs are typically managing HR tasks for many businesses at the same time. This means they can’t be 100% dedicated to you and your employees and may even be limited by their own internal processes that are geared towards helping hundreds of other employees. This may cause friction as your business grows and you don’t have your own internal team dedicated to managing unique employee issues and complex scenarios specific to your business.
The three most popular options for outsourcing your HR administration are:
At the end of the day, all three options will keep you from spending your time Googling complex tax laws and regulations. If you want to outsource your HR so that you can focus on your business, you should look into all three to see what will work best for you and your business.
Disclaimer: Any articles written on this website, including this article, are not to be taken as legal or HR advice. Employment laws are constantly changing and vary by location and industry. You should consult a lawyer or HR expert for guidance. Need HR advice? We can help!
📸 Photo by Jud Mackrill on Unsplash