The Difference Between a PEO and Freelance Hiring

5 minute read

written by Cápita Works

Sep 14, 2022

If hiring employees, your business must maintain a streamlined process with minimal HR overhead. You probably want to find the best possible employees without spending months on interviews and hiring tests that you won’t be able to evaluate correctly. Let’s look at the different ways you can hire employees for your business—and what each option means for your company.

What’s the difference between a PEO and a freelancer hiring?

A PEO (Professional Employee Organization) is a company that provides HR management and business administration services for clients in exchange for a monthly retainer. A PEO will help you find, hire, and manage employees on a contract basis to fit your business needs.  

PEOs can help you find part-time or full-time employees to insource, becoming an extension of your company.

Freelancers are people who perform work for your company on a project-by-project basis. Freelancers are generally hired as contractors and usually work remotely. Contractors work within a particular industry and may not have the skill set to do the work needed. Freelancers may be a better option than hiring full-time employees if you have a project that requires immediate attention or on a seasonal basis.

When to use Freelance Hiring

Freelancers can be great when you need short-term or project-based work completed. They may be a better fit for a position that doesn’t require a long-term commitment, such as marketing strategies, social media campaigns, or completing specific tasks in a concise time frame.  

Some examples of when you might want to hire freelancers are during the peak season of your business (if you don’t have the capacity for extra help), for one-off projects, or for tasks that don’t require a full-time or long-term employee.

When to use a PEO for Employees   

A PEO will help you find and hire employees that can work for you as an extension of your company. They’re not on your payroll, so you don’t have to take care of the legal liabilities that come with direct hiring.

PEOs are a great choice if you’re looking to add full-time employees to your team and don’t have the resources to provide full benefits. Through a PEO, like Cápita Works, you can get talent for a fraction of the cost.

PEOs provide all the services of a full-service HR department, including payroll and benefits administration, without the upfront cost of hiring an HR team. It’s important to note that PEOs can only hire employees who are already authorized to work in the US. If you hire nearshore with a company such as Cápita Works, our US entity takes care of that.

PEOs provide administrative and HR services for all your employees, so you don’t have to worry about managing payroll or benefits. At Cápita Works, we provide our virtual assistants with private health and life insurance, live and on-demand training, social events, and wellness programs, among other perks.

Why PEOs are better than Freelancers

PEOs provide many of the same services as freelancers. Still, they have a dedicated team of HR administrators and administrative staff to help you with your hiring, payroll, and benefits needs.  

You also won’t suffer from the “vanishing VA” effect. Because you outsource services, your freelancer may eventually drop you or work with other clients without your consent. With a PEO, you insource an employee, meaning they’ll work exclusively for you, which helps aid in administrative tasks in the long run.

PEOs offer a one-stop shop for all your HR needs, so there’s no guesswork involved in hiring employees. At CW, all our virtual assistants go through a five-step process to help you find your next superstar.

With a PEO, you know what you’re getting into and the amount of money you’ll be spending on hiring employees. PEOs can also help you find the right employees for your company, and they provide services like background checks, and screening of potential employees that freelancers may not offer.

Freelancers don’t receive the same benefits that working for a company provides, leaving you open to legal liabilities. So, if you’re looking to expand your team but are on a tight budget to hire full-time employees, our nearshore virtual assistants are the best solution for you.

If you’re interested in our services, you can learn more about our process. Also, check out our guide per industry to learn more about the roles a VA can perform within your company. Contact us at for any further information.  


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