Do you know any PEOs that take on just 1 employee?

My suggestion is to make the person a contractor and pay him a rate to cover any benefits you were planning under the PEO. It is expensive since you not only have to cover his benefit costs and markup associated with the PEO plus you need to pay Workers Comp and pay employer taxes. One last thing to think about is what happens if that person quits, they you have to unwind that obligations. Going contract is the simpler and most cost effective method. In one of my companies, we used contractors until we hit 5 persons and then we joined a PEO.

TriNet will take 1 employee but you'll pay dearly for the service. The fixed costs are just too high to make it worthwhile for all but the highest paid employees. I concur with Edward that the PEO model really makes better economic sense for 5 or more employees.

Prior to that, you're probably better off to use an online payroll service such as Intuit. They can handle the payroll, taxes and filings at both the federal and state levels. They also offer workers compensation insurance and some employee benefits as additional services. It's a good solution until you build up your staff to the level where a PEO becomes cost effective.

Try Centricity in Walnut Creek, CA, BackOps in San Francisco (not sure they do PEO but worth a look), and definitely Sequoia Benefits in Foster City, CA (I'd be happy to intro you to Centricity and Sequoia). I would advise against the contractor route suggested above. I don't know how things work in the UK, but here you have to be very careful how you classify people as contractors vs. employees. It is not up to you, but to a number of agencies (tax, labor, etc.), who each have their own rules about who is an employee and who isn't. Doing it wrong can get you in trouble. And all it takes to get in trouble is one fired contractor filing for unemployment.