{"id":4,"date":"2016-04-21T04:44:28","date_gmt":"2016-04-21T04:44:28","guid":{"rendered":"http:\/\/www.trakaccountants.com.au\/wp-blog\/?p=4"},"modified":"2017-03-15T08:40:30","modified_gmt":"2017-03-15T08:40:30","slug":"should-you-be-employing-or-contracting","status":"publish","type":"post","link":"https:\/\/www.trakaccountants.com.au\/blog\/should-you-be-employing-or-contracting\/","title":{"rendered":"SHOULD YOU BE EMPLOYING OR CONTRACTING?"},"content":{"rendered":"

A common question for businesses needing some work done is: should we employ a new person, or simply contract the workout? The answer isn\u2019t a straight \u2018yes\u2019 or \u2018no\u2019, as it depends heavily on your business, the work to be done, and the person who might be doing the work.<\/p>\n

What\u2019s the difference?<\/h3>\n

Put very simply: an employee is considered part of your business, and you have responsibility for them and their work; a contractor is independent of your business and they have primary responsibility for themselves and their work. However, there are far more specifics that you need to be aware of \u2013 have a look at the\u00a0ATO\u2019s explanation of employees vs contractors<\/a>.<\/p>\n

Do restrictions apply?<\/h3>\n

It\u2019s illegal to treat employees as contractors<\/a>. This is why it\u2019s important to get advice from a professional in the field, because they\u2019ll be able to assess your situation and the exact parameters of your proposed relationship to the worker, and tell you whether you need to either change those parameters or employ the person directly.<\/p>\n

What are the payroll implications?<\/h3>\n

There are a few basic differences between paying a contractor and paying an employee:<\/p>\n\n\n\n\n\n\n\n
<\/td>\nEmployee<\/td>\nContractor<\/td>\n<\/tr>\n
Income tax<\/td>\nYou take out PAYG income tax and pay the withheld amount to the ATO<\/td>\nYou pay the gross wages to the contractor, and they handle income tax payments themselves.<\/td>\n<\/tr>\n
Superannuation<\/td>\nYou pay superannuation quarterly (or more frequently) for each employee.<\/td>\nTypically the contractor handles their own superannuation payments, but don\u2019t assume that this will be case: talk to a business advisor to check the specific circumstances.<\/td>\n<\/tr>\n
Fringe benefits tax<\/td>\nIf you supply an employee with a fringe benefit (health insurance, a car, computer), then you will need to report and pay fringe benefits tax.<\/td>\nNo fringe benefits tax obligations.<\/td>\n<\/tr>\n
Payroll tax<\/td>\nPayroll tax will be payable per employee.<\/td>\nPayroll tax might not be payable; talk to a business advisor to check your specific circumstances.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

Which one is right for my business?<\/h3>\n

As a general rule of thumb, if you\u2019re bringing in someone to work on a project; something that ends in a specific result \u2013 for example, painting the outside of a building \u2013 then you would hire a contractor. If you have a collection of tasks that regularly need to be completed \u2013 for example, reception and office administration \u2013 then you would hire an employee. But as we\u2019ve stated before, it\u2019s important that you get advice about your specific situation, and ensure that you won\u2019t be violating legal requirements; and, of course, that you\u2019re following the path that best suits your business.<\/p>\n

Next up\u2026<\/h3>\n

In our next blog post, we\u2019ll revisit this contractors vs employees topic, and look at some of the advantages of hiring contractors over employees.<\/p>\n","protected":false},"excerpt":{"rendered":"

A common question for businesses needing some work done is: should we employ a new person, or simply contract the workout? The answer isn\u2019t a straight \u2018yes\u2019 or \u2018no\u2019, as it depends heavily on your business, the work to be done, and the person who might be doing the work. What\u2019s the difference? Put veryRead More \u00bb<\/a><\/p>\n","protected":false},"author":1,"featured_media":5,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":"","spay_email":"","footnotes":""},"categories":[14,10,17],"tags":[],"class_list":["post-4","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ato-compliance","category-news","category-staff-management"],"jetpack_featured_media_url":"https:\/\/www.trakaccountants.com.au\/blog\/wp-content\/uploads\/2017\/03\/Trak_WebBlog_Should-you-be-employing-or-sub-contracting_FB.jpg","_links":{"self":[{"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/posts\/4","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/comments?post=4"}],"version-history":[{"count":1,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/posts\/4\/revisions"}],"predecessor-version":[{"id":6,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/posts\/4\/revisions\/6"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/media\/5"}],"wp:attachment":[{"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/media?parent=4"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/categories?post=4"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/tags?post=4"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}