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Administrative Services Organization (ASO)

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Administrative Services Organization (ASO)

 

Administrative Services Organizations provide outsourced solutions to meet a company's human resources and administrative needs. In the late 1990s, the Professional Employer Organization (PEO) industry established the term ASO to distinguish between full-scale PEO services and selective administrative support. 

 

ASO service offerings can include:

 

  • Payroll administration and processing

  • Employee time and attendance

  • Health and dental benefits administration

  • Expense reporting

  • Retirement vehicles (401(k)

  • Short-term and long-term disability coverage

  • Life insurance

  • Regulatory compliance

 

Example: 

 

  • Many new or small businesses are unprepared for the administrative duties of running a business. If they have an ASO handling their payroll, employee benefits, and tax administration, the HR professionals working in small companies can focus on building employee relationships.

  • An ASO arrangement is most beneficial to companies with more than 100 employees because of their cost-saving techniques and bargaining abilities. In this scenario, an ASO can administer the company's workers' compensation, payroll, HR support, and wellness benefits. 

Related Terms

Administrative Services Only

and Administrative Services Organization are terms often used interchangeably because the acronym ASO is attached to both. For this reason, the two services are sometimes confused with one another. However, administrative services only organizations only administer employee health benefits and disability coverage. In this arrangement, the employer's health benefits are self-funded, and the employers pay claims out of pocket.

Professional Employer Organizations (PEO)

are similar in function to an administrative services organization, but the primary difference between the two is that with a PEO, the PEO is the employer of record, and there is a co-employment relationship with the client. In an ASO arrangement, the client is the employer of record for tax purposes. An ASO serves as a service provider only.

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