Texas is a small-business state: 3.5 million small firms employ nearly half its workers. Its PEO rules are distinctive rather than heavy. There is no state income tax, and the TWC collects unemployment tax. The Texas Payday Law sets pay timing, and most private employers may opt out of workers’ comp.
Coemployment is still regulated. Any firm offering a PEO in Texas needs a TDLR license once it has even 1 covered employee in the state.
Why Texas Employers Choose a PEO
Texas regulates professional employer organizations under Labor Code Chapter 91, through the Texas Department of Licensing and Regulation (TDLR). Every Texas PEO needs a license once it covers a single employee in the state, per the TDLR general information page.
A full license covers most firms. A limited license is reserved for out-of-state companies with 50 or fewer Texas employees, no Texas office, and no Texas-based clients. A Texas PEO service provider shares employment duties; a payroll-only processor that shares none does not need the license.
INSIGHT: What does a Texas PEO have to get right?
Texas looks lighter on paper than many states. Licensing, pay timing, unemployment tax, and coemployment paperwork still follow state-specific rules.
- PEO license required with even 1 covered employee in Texas (TDLR).
- Limited license only for qualifying out-of-state PEOs with 50 or fewer Texas employees (TDLR).
- Nonexempt staff paid at least twice a month (TWC, Texas Payday Law).
- New-hire reports due to the Attorney General within 20 calendar days.
Since 2019, the Texas Constitution has blocked any tax on individual net income, which leaves paychecks free of state withholding. A Texas payroll service still handles FICA, FUTA, and federal income tax.
The state’s own payroll tax is unemployment insurance (UI), paid to the Texas Workforce Commission (TWC) on the first $9,000 per employee each year. Each employer gets an assigned rate. Under the Texas Payday Law, nonexempt staff must be paid at least twice a month, and fired workers must receive final pay within 6 calendar days. Strong Texas payroll services track both rules.
Benefits and risk explain the rest. A PEO pools buying power for health and retirement plans, handles unemployment claims, and adds safety help. PEO services in Texas often include workers’ comp, though TDLR does not require it for a license.
Texas lets most private employers choose whether to carry workers’ comp. Those that opt out are called non-subscribers and must file a notice of no coverage with the Texas Department of Insurance (TDI). A PEO for Texas clients has to state in the agreement who holds the policy.
INSIGHT: What makes Texas payroll different in 2026?
Texas payroll has fewer state layers than California or New York. Unemployment tax, pay timing, PEO licensing, and workers’ comp choices still need local care.
- $7.25 minimum wage, matching the federal rate (US Department of Labor).
- No individual income tax under the Texas Constitution.
- UI taxable wages capped at the first $9,000 per employee (TWC).
- Workers’ comp optional for most private employers (TDI).
Sources:
as of October 2026
A licensed PEO Texas firm signs with shared employer duties and bundles payroll, benefits, HR, UI administration, and risk support. My explainer on what a PEO is covers the basics of coemployment.
Payroll-only firms process pay and file returns without sharing employment, and ASOs layer HR administration on that same footing. For any PEO service in Texas, the IRS Certified PEO (CPEO) list is a separate federal check.
My list of 15 mixes Houston and Dallas specialists with statewide operators. National lists of the best PEO companies in Texas usually skip smaller regional firms. For those, see my best PEO companies roundup.
Top 15 PEO Companies in Texas
Begin by asking whether you need licensed coemployment at all. The PEO companies in Texas below range from full PEOs to payroll-first shops.
Then settle workers’ comp. You can take a policy through the provider, keep your own, or stay a non-subscriber. The top PEO services in Texas handle each case differently.
Geography matters too. Houston, Dallas, and Southeast Texas each have local firms, and a search for the best PEO services in Texas should include them.
My criteria were TDLR license status, TWC tax handling, Texas Payday Law support, benefits depth, workers’ comp or non-subscriber help, HR support, and pricing clarity. I matched any CPEO or accreditation claim against the IRS list or the provider’s own wording.
No single best Texas PEO wins on every point, so the list follows the alphabet.
All fifteen providers appear in A-to-Z order. The sequence says nothing about quality, preference, or ranking.
Employer Flexible
Provider Type:
PEO with 4 Texas locations
Company Description:
Employer Flexible is a Texas-rooted PEO with 4 Texas locations and service in Montana, Oklahoma, and Alabama. This Texas PEO company pairs benefits strategy with HR, payroll, and its own myHR platform. Its team promises service without phone queues.
Key Specialty Area:
Hands-on PEO for field crews and offices
Service Cost:
Quote-based
Top Advantages:
- Benefits Strategist assigned to plan design
- In-house myHR and myMobile platforms
- Support for field crews as well as office teams
Scope of Services:
- HR services and administration
- Benefits strategy and administration
- Payroll, tax and risk management
Our Verdict
I would look at Employer Flexible for a Texas contractor with mobile crews and seasonal hiring swings.
Employers One Source Group
Provider Type:
PEO, Katy
Company Description:
Employers One Source Group (E1) opened in 1998 and operates from Katy. It is a Texas PEO provider that runs payroll, benefits, workers’ comp, and tax compliance, and investigates unemployment claims.
Key Specialty Area:
Katy-based coemployment for owner-run firms
Service Cost:
Quote-based
Top Advantages:
- Voted Best of West Houston for HR and payroll in 2025
- Identity protection benefit through IDShield
- Unemployment claims investigated for clients
Scope of Services:
- Payroll administration and tax compliance
- Employee benefits and workers’ comp
- HR support and risk management
Our Verdict
For a Katy or Fort Bend owner who values a long local track record, E1 is worth a call, I think.
FirstStarHR
Provider Type:
PEO, Dallas
Company Description:
FirstStarHR is a Dallas-headquartered PEO with a Houston line, and clients coast to coast. It sells services à la carte, so it also works as one of the payroll services Dallas, Texas employers pick piece by piece.
Key Specialty Area:
À la carte HR services from Dallas
Service Cost:
Quote-based; pay only for the services chosen
Top Advantages:
- Every service available separately
- Team with 30+ years in payroll, insurance, and HR
- Dallas and Houston contacts
Scope of Services:
- Payroll processing and delivery
- Employee benefits and risk management
- HR and regulatory compliance
Our Verdict
My pick for a DFW company that wants payroll now and benefits later.
Harbor America
Provider Type:
PEO, Kingwood and Flower Mound
Company Description:
Harbor America operates from Kingwood and Flower Mound under President Doug Lowery. It offers PEO services Texas employers use for payroll, HR, benefits, and workers’ comp, including agriculture and H-2A support.
Key Specialty Area:
PEO with agriculture and H-2A support
Service Cost:
Quote-based
Top Advantages:
- Dedicated payroll specialist for each client
- Agriculture and H-2A program
- Commercial insurance through the same provider
Scope of Services:
- Payroll administration and HR solutions
- Workers’ comp, safety and risk management
- Employee benefits and compliance support
Our Verdict
Harbor America is the one I would call for a Texas farm or nursery using H-2A labor.
HR&P Human Resources
Provider Type:
PEO, ASO, and payroll provider, Houston
Company Description:
HR&P is a Houston firm offering PEO, ASO, and payroll models plus ACA support. It provides payroll services Texas companies can use without coemployment and respects existing broker relationships.
Key Specialty Area:
Flexible HR models with ACA expertise
Service Cost:
Quote-based
Top Advantages:
- PEO, ASO, and payroll-only options
- Clients keep their existing benefits broker
- Custom HRIS for the employee life cycle
Scope of Services:
- Payroll fulfillment and tax compliance
- Benefits administration and ACA support
- HR support and workers’ comp
Our Verdict
I would shortlist HR&P for a Houston company that likes its broker but needs HR help.
J Solutions
Provider Type:
PEO, Beaumont
Company Description:
J Solutions is a women-owned PEO founded in 2003 and licensed in Texas, according to its site. Its Texas PEO services payroll package covers TWC, 940, and 941 filings for SMBs and medical practices.
Key Specialty Area:
PEO for Southeast Texas medical practices
Service Cost:
Quote-based; proposals requested online
Top Advantages:
- Says it assumes 100% of workers’ comp liabilities
- Experience with physicians’ practices and medical groups
- Staff bringing 60 combined years in PEO work
Scope of Services:
- Payroll administration and tax filing
- Employee benefits and HR services
- Workers’ comp, safety and compliance
Our Verdict
My pick for a medical group in Beaumont or Port Arthur that wants workers’ comp handled.
Lone Star PEO
Provider Type:
Licensed PEO, Texas
Company Description:
Lone Star PEO was established in 2016 as a licensed Texas PEO service with full-service and customized HR options. It is a NAPEO member and states that it holds ESAC accreditation. Its motto stresses service to small businesses over scale.
Key Specialty Area:
Full-service PEO or custom HR modules
Service Cost:
Quote-based
Top Advantages:
- ESAC accreditation stated on its site
- Owners and staff available directly, no call centers
- Choice of full PEO or tailored HR services
Scope of Services:
- Payroll and tax administration
- Human resources and benefits
- Risk management and compliance
Our Verdict
Lone Star suits an owner who wants to speak with decision makers, not a support queue, in my view.
Professional Management Group (PMG)
Provider Type:
PEO, Georgetown
Company Description:
Professional Management Group has run its PEO out of Georgetown since 1989. It acts as an off-site personnel department and is a PEO service provider Texas businesses in Williamson County have used for decades.
Key Specialty Area:
Off-site personnel department since 1989
Service Cost:
Quote-based, with a single payment each pay period
Top Advantages:
- One payment covers payroll, taxes, and benefits
- Large-company benefits for small teams
- Services sized to each budget
Scope of Services:
- Payroll and employment taxes
- Employee benefits for small teams
- Personnel and HR administration
Our Verdict
I would call PMG for an Austin-area business that wants 1 invoice for all employment costs.
ProSource Solutions
Provider Type:
PEO and HRO, Houston
Company Description:
ProSource Solutions has served Houston since 1999 and is one of the PEO companies in Houston, Texas, focused on construction payroll. It also offers recruiting, employment law guidance, and training.
Key Specialty Area:
Coemployment built around construction payroll
Service Cost:
Quote-based
Top Advantages:
- Certified payroll reports and prevailing wage compliance
- Union reporting and job costing
- Experience with plumbing and electrical contractors
Scope of Services:
- Payroll outsourcing and tax filing
- Benefits and risk management
- HR outsourcing, recruiting and training
Our Verdict
I’d pick ProSource for a Houston contractor on public works jobs.
Questc (Questco)
Provider Type:
PEO, The Woodlands
Company Description:
Questco was founded in 1989 and runs its main office in The Woodlands, with lines in several other states. It is a natural shortlist name for a PEO in The Woodlands; Texas businesses compare it, and it runs a podcast for owners.
Key Specialty Area:
Safety-minded coemployment from The Woodlands
Service Cost:
Quote-based; an online HR cost calculator helps estimate
Top Advantages:
- IRS certification held by Questco HR LLC since 2018
- Programs for franchises and mergers
- Multi-state compliance support for growing employers
Scope of Services:
- HR operations and payroll
- Employee benefits and HR compliance
- Safety, workers’ comp and HR technology
Our Verdict
I would look at Questco for a Montgomery County franchise group expanding into other states.
R&P Employer Solutions of Texas
Provider Type:
Payroll and employer services, Beaumont
Company Description:
R&P Employer Solutions is a family-owned firm with Beaumont and Houston offices across the Golden Triangle. It leads with payroll services for Southeast Texas employers, plus HR, benefits, and workers’ comp.
Key Specialty Area:
Payroll first, plus HR across the Golden Triangle
Service Cost:
Quote-based, with a scheduled call
Top Advantages:
- Workers’ comp without large down payments
- Return-to-work programs after injuries
- Local offices in Beaumont and Houston
Scope of Services:
- Payroll processing and tax filing
- HR management and employee benefits
- Workers’ comp claims and compliance
Our Verdict
R&P suits a Port Arthur or Orange employer that wants payroll first and HR help nearby.
Resourcing Edge
Provider Type:
PEO with Texas offices in Rockwall and El Paso
Company Description:
Resourcing Edge lists offices in Rockwall and El Paso and joined OneDigital in 2022. Among Texas PEO companies, it says it serves 90,000+ worksite employees. Its model runs from payroll-only support to full coemployment.
Key Specialty Area:
Scalable model from payroll to coemployment
Service Cost:
Quote-based
Top Advantages:
- 3 Resourcing Edge entities hold IRS certification
- Workers’ comp through a master policy
- NAPEO member since 2012, ESAC stated on its site
Scope of Services:
- Payroll processing and benefits administration
- HR administration and compliance
- Workers’ comp and risk management
Our Verdict
My pick for a North Texas employer that may grow from payroll into full coemployment.
Solid Business Solutions
Provider Type:
PEO and HR partner, Richmond
Company Description:
Solid Business Solutions has served Texas businesses from Richmond since 2009. It delivers Texas PEO services to clients in Houston and Dallas, from payroll and tax to risk management, and calls its team HR allies.
Key Specialty Area:
HR, payroll, and insurance from one team
Service Cost:
Quote-based
Top Advantages:
- Dedicated HR business partner
- Integrated payroll and HR technology
- Insurance specialists for cost control
Scope of Services:
- Payroll and tax administration
- Employee benefits and benefits administration
- HR, risk management and technology
Our Verdict
Solid fit for a Fort Bend company that wants HR, payroll, and insurance advice from 1 team, I think.
Unique HR
Provider Type:
Family-owned PEO
Company Description:
UniqueHR is a family-owned PEO led by Garry and Chris Bradford. It has held ESAC accreditation since 2003, per its site, and covers HR, payroll, workers’ comp, benefits, and retirement. Its team handles safety training and claims in-house.
Key Specialty Area:
Risk prevention and claims management
Service Cost:
Quote-based; consultations are free
Top Advantages:
- ESAC accredited since 2003, per the company
- Safety training and OSHA compliance help
- 401(k) management that eases fiduciary duties
Scope of Services:
- Payroll services and HR
- Workers’ comp, safety and claims
- Employee benefits and retirement plans
Our Verdict
UniqueHR suits an industrial firm where injury prevention matters as much as payroll, in my view.
Wise PEO
Provider Type:
PEO, Hurst
Company Description:
Wise PEO is a Hurst-based PEO serving DFW businesses. It acts as employer of record for tax and benefits, while clients keep control of daily operations and staff. Its services include insurance and finance support.
Key Specialty Area:
DFW PEO for payroll, benefits, and compliance
Service Cost:
Quote-based; the site says PEOs usually charge per employee or a percentage
Top Advantages:
- Workers’ comp and claims management
- Insurance and finance services alongside HR
- Plain-language guidance on the coemployment model
Scope of Services:
- Payroll services and HR
- Employee benefits and compliance
- Insurance, finance and risk management
Our Verdict
I would call Wise PEO for a Tarrant County business that wants HR and insurance from 1 local office.
How Much PEO and Payroll Services Cost in Texas
Quotes from the PEO companies Texas owners usually meet come in 2 shapes. One is a monthly charge per worker; the other is a cut of gross payroll. Workers’ comp decisions often matter more than the admin fee.
Payroll services in Texas without coemployment are cheaper, billed per run or per head, because they don’t include benefits pools and risk programs.
A PEO fee usually includes payroll and tax work, benefits and HR support, unemployment claims, and safety services. Outside it sit health premiums, any workers’ comp premium, onboarding, and one-off projects.
On top of any fee sit FICA, FUTA, and Texas UI, charged on the first $9,000 of wages at your TWC-assigned rate. No state income tax is withheld.
The best payroll service for Texas taxes 2026 should already file through TWC’s new TxUS system, with logins and bulk wage uploads set up.
Ask any payroll service Texas firms offer to confirm that before you sign, and ask who answers TWC notices.
None of the 15 providers publish a price, so compare quotes built on the same employee census. I also ask how workers’ comp pricing changes at renewal, because year 1 claims can lift the second-year quote.
INSIGHT: Which filings does a Texas payroll service provider handle?
Without state withholding, Texas payroll centers on federal returns, TWC unemployment reports, and new-hire notices.
- Quarterly UI wage reports and tax payments to TWC, moving to TxUS in 2026.
- Each new hire or rehire reported to the Attorney General within 20 days.
- Nonexempt workers paid at least twice a month (Texas Payday Law).
- Quarterly Form 941 and year-end W-2s for the IRS.
Per-employee and percentage pricing diverge as wages rise. My guide to how much a PEO costs compares both.
If you mainly want HR help, my PEO vs HRO piece explains when outsourcing without coemployment is enough.
FAQs on PEO and Payroll Services in Texas
What does a PEO in Texas do?
A PEO enters a coemployment relationship with your business and takes on the duties set out in the professional employer services agreement. Typical tasks include payroll and payroll tax administration, employee benefits, HR support, unemployment claims, and risk management. You keep directing the daily work. The state regulates these firms through TDLR, so I review the agreement and license before making any recommendation. Duties the contract leaves out stay with your company.
Does a PEO need a license in Texas?
Yes, when it performs professional employer services in the state. TDLR requires a license once a provider has any covered employee in Texas, even 1. A limited license exists for small out-of-state firms with 50 or fewer Texas employees and no local office or clients. A company that only processes payroll, with no shared employment, does not need this license. Ask for the license number and check it on the TDLR search tool.
How much does a PEO cost in Texas?
Most providers quote either a monthly fee per employee or a percentage of payroll, set by a custom quote. Headcount, industry, benefits, the workers’ comp choice, claims history, and service scope all move the total. Look at the admin fee on its own before adding health and workers’ comp premiums. I ask every finalist to price the same census so you can compare the numbers fairly. Do not forget setup charges or any monthly minimum.
Is workers’ compensation required in Texas?
Not for most private employers. Texas lets them decide whether to carry workers’ compensation, although public employers and some contractors face other rules. Employers that opt out become non-subscribers and must file an annual notice with the state and post notices for staff. They also lose some legal protections in injury lawsuits. If a PEO provides coverage, the agreement should name the party that maintains the policy.
What is the minimum wage in Texas in 2026?
Texas follows the federal minimum wage of $7.25 an hour for covered nonexempt staff. Federal overtime rules require time-and-a-half after 40 hours in a workweek, and there is no daily overtime rule. The Texas Payday Law adds its own rules: twice-monthly pay for nonexempt staff and final pay within 6 calendar days after a discharge. Staff who resign get final pay on the next regular payday.
What payroll taxes do Texas employers pay?
Texas has no state income tax, so employers don’t withhold any state income tax. The employer’s list is federal withholding, Social Security and Medicare, FUTA, and unemployment tax paid to the Workforce Commission. That tax applies to the first $9,000 of each worker’s annual wages at an employer-specific rate, which for 2026 ranges from 0.32% to 6.32%. New employers usually start near 2.7%.
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.
