You have built a team in Nashville, Franklin, Memphis, Knoxville, or Chattanooga, and the admin has grown with it. The state has 741,196 small businesses and 1.2 million people working in them, so the problem is common. The state doesn’t tax wages, which keeps payroll light. The value of a Tennessee PEO therefore lies in benefits, insurance, and HR, not in tax filing.
3 pressure points push owners to look for help. Workers’ comp is required from 5 employees, and in construction, from the first. E-Verify and other hiring rules add paperwork to every new start. And group health benefits are expensive when only a handful of people share the risk.
PEO Tennessee: Why Small Businesses Use One
Few states make payroll this plain. No state or local income tax applies to wages, so there is nothing to withhold for the state. What remains is unemployment insurance (UI), charged on the first $7,000 of each employee’s wages. The rate table resets every 6 months, unlike in other states. Employees scheduled for 6 consecutive hours must get a 30-minute unpaid break. The federal minimum wage and overtime rules apply. Even so, Tennessee payroll services earn their fee through federal filings, UI rate changes, and break and overtime records.
INSIGHT: What does Tennessee payroll include?
There is no state income tax line on a pay stub here. The state pieces are unemployment insurance and recordkeeping.
- State income tax on wages: none.
- Unemployment premium for a new employer: generally 2.7% of the first $7,000 paid to each worker.
- Premium rate table: reset every 6 months; Table 6 runs through December 2026.
- Minimum wage: the federal $7.25 an hour.
Employer filings fill the rest of the calendar. Employers report UI wage reports to the Department of Labor and Workforce Development (TDLWD) every quarter, and they must report each new hire to the state. Federal withholding, FICA, and FUTA have their own deposit dates. The Tennessee Lawful Employment Act adds a hiring check. Employers with 35 or more full-time-equivalent (FTE) employees must use E-Verify; smaller ones with 6 or more may use E-Verify or keep listed documents. Providers of payroll services Tennessee companies hire run these steps on a schedule and keep the records.
Owners move from a payroll service to a PEO for 2 reasons. The first is workers’ comp. Most industries require it at 5 employees, and construction requires it from the first employee. Part-time staff and paid officers count. The state runs no insurance fund, so small employers buy from private insurers or the Assigned Risk Plan. Under a PEO, your staff can sit on the provider’s policy. Benefits are the other pull, because a pooled group can offer medical, dental, vision, and a 401(k). Offering a health plan is optional below 50 full-time-equivalent employees, but good candidates expect one. Both needs drive demand for PEO services in Tennessee.
INSIGHT: Which insurance and benefits does a Tennessee employer have to provide?
Workers’ comp is the main state requirement. Small employers can legally skip health and retirement plans, though hiring gets harder, which is the gap a PEO pool fills.
- Workers’ comp: 5 or more employees; 1 or more in construction.
- State workers’ comp fund: none.
- No state mandate for paid sick leave, disability, family leave, or retirement plans.
- Federal ACA: employers with 50 or more full-time-equivalent staff must offer coverage.
3 kinds of providers compete for your business. A PEO co-employs your staff and bundles payroll, benefits, workers’ comp, and HR, while you keep daily control. Buy a payroll service, and you get paychecks and filings, and nothing more. The middle path is HR outsourcing, where nobody becomes a co-employer. If the terms are new, my explainer on what a PEO is will help. Any PEO in Tennessee must register with the Department of Commerce and Insurance and renew every 2 years. On the federal side, the IRS maintains a public list of Certified PEOs (CPEOs). Firms on it are solely responsible for federal employment taxes on the wages they pay.
I reviewed 15 options for employers here: state-based providers and national PEOs that serve the state, several with Nashville offices. Each profile shows the services, the pricing model, and the best fit. No single firm is the top PEO company in Tennessee for every business. For a nationwide comparison, read my guide to the best PEO companies.
Top 15 PEO Companies in Tennessee
The PEO companies in Tennessee differ more than their websites suggest, so start with 3 questions. Are you after the full bundle, with benefits and workers’ comp attached to payroll? Would payroll and filings alone do? Or do you only want HR advice? How many people do you employ, given the 5-employee workers’ comp threshold, the 35-FTE E-Verify line, and the ACA mark at 50? Last, weigh a provider headquartered here against a national one with a deeper benefits menu.
To find the best PEO company in Tennessee for your situation, apply the criteria I used. Look for a current state PEO registration and accurate UI filings through the semiannual rate changes. Check the workers’ comp model and E-Verify support. Then judge the medical and 401(k) plans, the handbook and HR help, any CPEO or accreditation claim, and how openly the firm prices. The alphabetical order is deliberate.
All 15 providers appear in A-to-Z order. The sequence says nothing about quality, preference, or ranking.
Adams Keegan, Inc.
Provider Type:
Memphis-headquartered PEO with a Nashville office
Company Description:
Adams Keegan, Inc. has its corporate headquarters on Poplar Avenue in Memphis, with offices in Nashville, Atlanta, and Dallas. For over 3 decades, it has provided payroll, HR, and benefits administration through customized PEO arrangements. The company states that it has been ESAC accredited since November 1996.
Key Specialty Area:
Customized HR and payroll from a Memphis base
Service Cost:
Not published; plans are built per client
Top Advantages:
- Headquarters in Memphis and an office in Nashville
- SOC 1 Type II examination completed, per the company
- Benefits work includes ACA reporting, COBRA, and carrier invoices
Scope of Services:
- Payroll with garnishments, deductions, and unemployment claims
- Benefits administration at any scale
- HR support for multi-location employers
Our Verdict
My pick for a Memphis or Nashville employer that wants a long-established home-state PEO.
ADP TotalSource
Provider Type:
National PEO open to Tennessee employers
Company Description:
ADP TotalSource is the co-employment product ADP markets to companies with small or midsize workforces. Payroll, benefits administration, workers’ comp, and compliance are included in one co-employment service, supported by a dedicated HR business partner. Its entities are on the IRS CPEO list, and the site also cites ESAC accreditation.
Key Specialty Area:
Large-scale PEO for multi-state growth
Service Cost:
Individually quoted; ADP lists no rate
Top Advantages:
- An assigned HR business partner advises your managers
- Benefits handled from plan negotiation to ongoing support
- Risk and safety programs managed by ADP
Scope of Services:
- Payroll platform with compliance support
- Benefits administration and enrollment
- Workers’ comp, safety planning and HR advice
Our Verdict
A solid choice for a Tennessee company that plans to hire in several other states.
Engage PEO
Provider Type:
Tampa-based PEO with clients in every state
Company Description:
Engage PEO is based in Tampa and serves small and mid-sized clients in every state. Under 1 agreement, it runs payroll and benefits, advises on HR and compliance, and manages risk and workers’ comp. Engage PEO, LLC is listed by the IRS as a CPEO, and the firm reports ESAC accreditation.
Key Specialty Area:
HR guidance from employment attorneys
Service Cost:
Priced per client, by staff count and services
Top Advantages:
- HR consultants are licensed attorneys, the company says
- Payroll automation designed to prevent late tax payments
- Multi-state workforce guidance for growing firms
Scope of Services:
- Payroll and tax compliance
- Employee benefits that meet ACA rules
- HR counsel from attorneys, plus risk and workers’ comp
Our Verdict
Suits a Tennessee employer that wants legal backup on E-Verify and termination questions.
ExtensisHR
Provider Type:
New Jersey PEO with a nationwide client base
Company Description:
ExtensisHR is a New Jersey PEO with more than 30 years of experience, serving small and mid-sized businesses across the US. Buyers can choose its standard PEO, upgrade to PEO Premier, or opt for HR outsourcing with no co-employment. Several Extensis entities hold IRS CPEO certification.
Key Specialty Area:
Tiered PEO with a non-co-employment option
Service Cost:
Quote based on tier and team size
Top Advantages:
- Standard and premier PEO tiers to choose from
- Each client gets an account manager and an HR partner
- Work Anywhere app puts HR tasks on a phone
Scope of Services:
- Payroll and compliance support
- Benefits and leave administration
- HR guidance and recruiting tools
Our Verdict
Worth considering for a Knoxville firm that wants to pick its level of service.
FrankCrum
Provider Type:
Florida PEO, family-owned, serving all states
Company Description:
FrankCrum was founded in 1981 in Clearwater, Florida, and remains family-owned. Clients across the US use it for payroll, HR, benefits, and retirement plans, with workers’ comp included. By the company’s count, more than 4,700 businesses use it.
Key Specialty Area:
Family-run PEO with an affiliated insurer
Service Cost:
Set by quote, according to payroll size and job risk
Top Advantages:
- Workers’ comp usually written by its sister insurance company
- HRIS with paperless onboarding and benefits enrollment
- Over 4 decades in business under the same family
Scope of Services:
- Payroll with employee self-service
- Group medical, dental and vision, and a retirement plan
- Workers’ comp and HR consulting
Our Verdict
A match for a Tennessee contractor or manufacturer focused on workers’ comp handling.
G&A Partners
Provider Type:
Houston PEO working in all 50 states
Company Description:
G&A Partners is based in Houston and says it supports small and mid-sized businesses in all 50 states. Its plans are organized by company size, including a band for 11-99 employees. Its entity, G&A Outsourcing VII, LLC, is IRS certified as a CPEO.
Key Specialty Area:
HR department for firms with 11 to 99 staff
Service Cost:
Quote based on company size
Top Advantages:
- Plans grouped by headcount
- CPA-founded firm with payroll tax depth
- HR, benefits, and compliance from 1 team
Scope of Services:
- Payroll and tax administration
- Benefits administration for each plan year
- HR, compliance and technology
Our Verdict
Fits a Chattanooga business that has outgrown doing HR at the owner’s desk.
Group Management Services
Provider Type:
Ohio-based national PEO with a Nashville branch
Company Description:
Group Management Services (GMS) has served small to midsize businesses since 1996 and lists 25 offices, including Nashville. Its PEO covers payroll, benefits, HR compliance, workers’ comp, and workplace safety. The IRS lists Group Management Services, Inc. as a certified PEO.
Key Specialty Area:
Certified PEO with a local Nashville team
Service Cost:
Quote-based; contact the Nashville office
Top Advantages:
- Office in Nashville, 1 of 25 nationwide
- Safety training tied to workers’ comp claim control
- IRS certification as a CPEO
Scope of Services:
- Payroll and tax administration
- Employee benefits packages for small teams
- HR compliance, safety and workers’ comp
Our Verdict
My pick for a Nashville-area company that wants a certified PEO with people in town.
Helpside
Provider Type:
Regional PEO with a Nashville location
Company Description:
Helpside has more than 35 years in business and lists Nashville among its locations. It provides payroll, HR, employee benefits, and compliance support. Its sweet spot, by its own description, is companies with 20 to 150 people.
Key Specialty Area:
Relationship-driven PEO for 20 to 150 employees
Service Cost:
Quote-based; no public pricing
Top Advantages:
- Dedicated Payroll Specialist and HR Business Partner
- No phone trees or chatbots, by stated policy
- Pooled large-group health, dental, and vision plans
Scope of Services:
- Payroll support from a named specialist
- Employee benefits at large-group rates
- HR and compliance guidance
Our Verdict
A good fit for a Middle Tennessee company of 20 to 150 people that wants named contacts.
Insperity
Provider Type:
Texas-based national PEO with a Nashville sales office
Company Description:
Insperity is a large PEO whose head office is in Kingwood, Texas, and whose clients are small and mid-sized firms. Its Nashville sales office is at 1201 Demonbreun Street. The company delivers payroll, benefits, and HR advice through software it built itself. Insperity PEO Services, L.P. carries IRS CPEO certification.
Key Specialty Area:
Big-company benefits, sold from Demonbreun Street
Service Cost:
A consultant meets you, then prices the service
Top Advantages:
- Sales office on Demonbreun Street in Nashville
- In-house HR software comes as part of the service
- PEO entities certified by the IRS
Scope of Services:
- Payroll and employment tax filing
- Group health and retirement plans
- HR support, training and compliance
Our Verdict
A natural choice for a Nashville firm that wants national benefits and a local office.
LBMC Employment Partners
Provider Type:
PEO based in Brentwood, Tennessee
Company Description:
LBMC Employment Partners works from Franklin Road in Brentwood, just south of Nashville. It offers full PEO and unbundled services, including payroll, HR consulting, and benefits administration. The firm appears on the IRS CPEO list at its Brentwood address.
Key Specialty Area:
Middle Tennessee PEO with unbundled options
Service Cost:
Not published; custom plans by need and budget
Top Advantages:
- Home office in Brentwood, Williamson County
- Choose the full PEO or single services
- Benefits arranged through its brokering team
Scope of Services:
- Payroll services, bundled or stand-alone
- Benefits administration and brokering
- HR consulting and compliance
Our Verdict
Best suited to a Franklin or Brentwood business that wants a certified PEO close to home.
Nextep
Provider Type:
Oklahoma PEO with clients coast to coast
Company Description:
Nextep is a Norman, Oklahoma PEO with nearly 30 years behind it and clients nationwide. Through co-employment, it manages HR, payroll, benefits, and risk and compliance on a single platform. Nextep, Inc. is on the IRS CPEO list, and the firm cites ESAC accreditation.
Key Specialty Area:
PEO with flat billing and a payroll app
Service Cost:
The company bills a flat itemized fee; ask for your figure
Top Advantages:
- Invoices show a flat fee, never a payroll percentage
- 2 taps on a phone approve the payroll run
- Dedicated Client Success Manager from day 1
Scope of Services:
- Payroll with automated tax filings
- Access to group health benefits
- HR, risk, and compliance
Our Verdict
Good for a small Tennessee team that values predictable invoices and a simple app.
PEO Blueprint
Provider Type:
PEO brokerage and advisory firm, not a PEO
Company Description:
PEO Blueprint is an independent brokerage and consulting firm for businesses with 1 to 500 employees. It helps owners choose a PEO and is a licensed insurance agency. It does not co-employ staff. The site says the chosen PEO pays it, at no extra cost to the client.
Key Specialty Area:
Independent help choosing and negotiating a PEO
Service Cost:
No cost to the business; paid by the PEO, per the site
Top Advantages:
- Compares and negotiates PEO offers on your behalf
- Stays involved through renewals and provider switches
- Builds benefit packages as a licensed insurance agency
Scope of Services:
- PEO selection and negotiation
- Brokerage of employee benefits plans
- HR strategy and consulting
Our Verdict
Useful for a Tennessee owner who wants several PEO quotes compared before signing with anyone.
Questco
Provider Type:
Texas PEO offering HR outsourcing across the US
Company Description:
Questco is a PEO from The Woodlands, Texas, founded in 1989, offering HR outsourcing across the US. Each small or mid-sized client gets a tailored service plan spanning payroll, benefits, HR operations, and compliance. Its entity, QUESTCO HR LLC, is IRS-certified.
Key Specialty Area:
Service plan built around each client
Service Cost:
Quote-based; HR cost calculator online
Top Advantages:
- Customized service plan agreed at the start
- Safety programs alongside workers’ comp
- Dedicated HR professionals for each account
Scope of Services:
- Payroll from the first day
- Benefits and medical plans
- HR compliance and technology
Our Verdict
A reasonable option for a Tennessee builder or plant that wants safety advice with its HR.
VensureHR
Provider Type:
Arizona PEO with a Tennessee landing page
Company Description:
VensureHR is headquartered in Arizona and sells its PEO to small and mid-sized employers. Its state page addresses owners in Nashville, Memphis, and beyond. Payroll, benefits, HR, and compliance are bundled. The IRS CPEO list did not include a Vensure entity on my check.
Key Specialty Area:
Wide service range, plus a page for local owners
Service Cost:
Quote-based, often after an HR assessment
Top Advantages:
- State page aimed at Nashville and Memphis owners
- HR assessment before a proposal
- Benefits administration and workers’ comp support
Scope of Services:
- Payroll processing and tax filing
- Employee benefits and plan administration
- HR and labor law compliance
Our Verdict
Fits a Memphis employer that wants many services from 1 large provider.
XcelHR
Provider Type:
Maryland PEO and ASO, national in scope
Company Description:
XcelHR has served small businesses for more than 30 years from its head office in Bethesda, Maryland. It offers PEO and ASO (Administrative Services Organization) models and describes itself as an IRS-certified PEO and a national HR services provider.
Key Specialty Area:
Small-business HR, with or without co-employment
Service Cost:
Quote-based; rates not listed
Top Advantages:
- Both co-employment and ASO arrangements
- Programs for manufacturers and professional trades
- Timekeeping and applicant tracking tools
Scope of Services:
- Payroll and payroll tax services
- Benefits and risk management
- HR management and talent acquisition
Our Verdict
An option for a Tennessee manufacturer that may prefer HR support without co-employment.
How Much PEO and Payroll Services Cost in Tennessee
A PEO typically charges a flat fee per employee per month or a percentage of total payroll, and both are quoted. Payroll-only services cost far less, billed per run or per employee, but include neither benefits nor workers’ comp. Advisory firms work differently: PEO Blueprint, for example, says the PEO pays it. For that fee, a PEO typically runs payroll and filings, administers benefits and workers’ comp, and answers HR questions.
Premiums for health and workers’ comp, 401(k) plan charges, and onboarding appear as separate items. The employer’s statutory costs come on top: UI on the first $7,000 of wages, federal FICA and FUTA, and workers’ comp premiums. None of the 15 providers listed a starting price when I checked. Add everything up for a year before you compare, because the headline fee misleads.
INSIGHT: What should payroll services in Tennessee handle for you?
State tax is light here. Check how a provider handles UI rate changes, records, and hiring compliance.
- State unemployment premium, due on each worker’s first $7,000.
- Premium rate table reset on January 1 and July 1.
- 30-minute break for 6 consecutive scheduled hours.
- E-Verify for employers with 35 or more FTE employees.
Sources:
as of October 2026
Plenty of Tennessee companies keep a sales team or a second site in Florida. Florida shares the no-income-tax advantage, but it runs unemployment and workers’ comp differently. My guide to PEO companies in Florida lists the firms operating in that market.
Staffing in other states can quickly change your compliance picture. California, with state disability insurance and daily overtime, is the clearest example. If you hire there, see my overview of PEO companies in California.
FAQs on PEO and Payroll Services in Tennessee
What does a PEO do for a small business in Tennessee?
It shares the employer role with you under a co-employment agreement. The provider runs payroll and files federal and state employment taxes. Group health and retirement plans become available, and the provider can also provide workers’ compensation coverage. The provider handles HR paperwork, such as hiring records and work authorization checks. You keep control of hiring, firing, and day-to-day work. The service agreement spells out which responsibilities move to the provider and which remain yours, so study it before signing.
Do PEOs need a license in Tennessee?
Yes. Co-employment providers must register with the Department of Commerce and Insurance, and a registration lasts 2 years. A full registration requires audited financial statements. A limited registration exists for out-of-state firms. It requires no local office, no direct solicitation here, and no more than 50 covered employees in the state. Ask any provider to show proof of its current registration status. IRS certification as a Certified PEO is a separate federal credential, and it is worth checking as well.
When does a Tennessee business need workers’ compensation?
Most employers need coverage once they have 5 or more employees. Part-time staff, family members, and paid corporate officers all count toward that number. Construction businesses and coal mining employers need coverage from the first employee. No state-run insurance fund exists, so the market is private. Coverage comes from a licensed private insurer, the Assigned Risk Plan, or self-insurance. A co-employment provider’s program is another route, and many small firms choose it to avoid buying and managing a separate policy.
Does Tennessee have a state income tax on wages?
No. The state does not tax wages, and no city or county levies an income tax. Employers therefore withhold only federal income tax, Social Security, and Medicare from each paycheck. The old Hall tax applied to investment income, not paychecks, and was fully repealed in 2021. Employers still pay state unemployment insurance on the first $7,000 of each employee’s wages. The rate for experienced employers is reviewed every 6 months, so check your rate notice each January and July.
How much does a PEO cost in Tennessee?
Expect 1 of 2 pricing models: a set fee per employee per month, or a percentage of total payroll. Nearly every provider quotes individually based on headcount, industry, and selected benefits. Health premiums, workers’ compensation premiums, and retirement plan costs sit outside that fee and are charged as they fall due. Ask for a proposal that separates those items clearly. Then compare what each option would cost over a full year, since the headline fee shows only part of the bill.
What is the minimum wage in Tennessee?
The state has no minimum wage law, so the federal rate of $7.25 an hour applies. Cities and counties cannot set a higher local rate. Tipped employees may be paid a cash wage of $2.13 an hour, as long as tips bring them to at least $7.25. Federal law governs overtime: hours past 40 in a workweek are paid at 1.5 times the regular rate. In practice, many employers here pay well above the minimum to compete for staff
Helen is Anywherer’s Market Analyst & Content Researcher, with extensive experience in analyzing global employment markets and HR technology trends. She is skilled at turning complex market data into clear, well-researched insights that inform every piece of content. With a strong grasp of the EOR, PEO, and international hiring space, Helen plays a key role in keeping Anywherer’s research accurate, up to date, and genuinely useful for readers.
