Can a Sole Proprietor use a PEO (professional employer organization)?

Yes.  And, no.

If the owner/sole proprietor is willing to put themselves on payroll and continue to have a set salary.  Since the PEO (professional employer organization) arrangement is derived from the employee leasing concept, the PEO becomes the employer of record. 

That said, some PEO’s will not take on a client with fewer than five worksite employees and some have set minimums at ten.