Independent Contractor Tips
The Difference Between PAYG Contractors and Independent Contractors
PAYG Contractors: PAYG Contractors are employess, they do not operate or work within their own company. Their employer is responsible for deducting and paying taxation on their behalf, they receive all legislative benefits and payments any normal employee earns. This includes employer covered work cover insurance and superannuation payments. They are usually paid at a daily or hourly rate which is higher than the rate paid for permanent employees to cover any annual holiday or public holiday entitlements dependant on the state in which they are employed and the duration of their employment with the agency through which they are employed.
Independent Contractors: Independent Contractors are not employees. They have their own registered business with a registered ABN Number. They subcontract to agencies or companies. They invoice their time by providing a weekly, fortnightly or monthly tax invoice. They charge by the hour, day or by the job, depending on what is negotiated. They must also provide their own tools of trade. Agencies do not deduct or pay taxation or superannuation, nor do they provide Work Cover insurance, these are all the responsibility of the Independent Contractor. They must have on-going public liability insurance and also charge GST.
HOURLY -VS- DAILY RATES?
Regardless of whether you are operating as a PAYG Contractor or an Independent Contractor you usually have the choice to be paid either at an hourly or daily rate. Many contractors choose an hourly rate which at times can be a mistake.
The biggest mistake we have seen contractors pay is charging an over inflated hourly rate. Most people who choose to contract do so for the flexibility. However most quickly find although the rates are usually great, that these are discounted if you do not attract enough work. If you charge over inflated rates unfortunately you will often find you have big gaps between jobs. Most companies want to employ experienced contractors who can do quality work and are more than prepared to pay competitive rates.
Contracting is about building a strong reputation and ongoing relationships. It is important to be realistic and to charge fair win/win rates. If you do this you will not only earn a fantastic salary you will be given the best ongoing opportunities.
Macquarie People operate contracting services through all specialist divisions. We are constantly in search of top contractors (PAYG and Independant). We provide highly competitive hourly or daily rates and many other benefits.
