Are your Contractors really Contractors? Part 1

08/13/21 • 53 min

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In this two-part episode of Get to the Contest Small Business Podcast, I talked to HR expert Kristy Lee Billett of the Your People Powered Business and the People Powered Podcast.
We discussed the key indicators of determining if someone is an employee or a contractor, some of the misconceptions around contractors, the consequences of getting it wrong and how to de-risk your business on this issue.
Contractors are integral in growing a business.
Contractors will allow you to grow your business, turn off and on your capacity as required without necessarily the overhead. With that in mind, it is important to be aware of what is and what isn't included with your agreement with your contractor. Make sure to be clear and document your arrangement.
It’s employee > contractors for the government.
Not to be melodramatic but I want to make a strong point: Government hates contractors. Unlike contractors, employees make it so much easier for the government to collect tax revenue. If people are on salary and wages, it just takes the gray out of it for them and that is why the government loves that. With contractors, the opportunity for evasion via non declaration and income splitting is higher – Hence the governments attitude.
Just because someone says they're a contractor does not make them a contractor.
Be deliberate about how you engage a contractor. What is their business structure? Are they taking orders or do they have control over completion? Who bears the risk? To help you with this, I would strongly recommend that you use the government contractor decision making tool.
How do you de-risk?
There are a lot of ways to de-risk when it comes to contractor engagement. Some are the following (know more in detail on the episode):

Don't engage someone who's just a sole trader or partnership.
Have specific terms of engagement.
Before anything else, know ALL the risks by engaging with an advisor or a trusted accountant. Remember that the risk is all on the employer. If you're the employee or the sub-contractor that's doing the work, very limited can go wrong from you if there's anything that blows up. If you are the business engaging the contractor – you might find you are up for super, leave entitlements, workers compensation , payroll tax and a whole range of other costs.

Document, document, document.
Now, this is something that I'm going to steal from Kristy Lee and apply to our sort of business and our advice to clients. Getting these things documented is so important and the best time to get things documented is upfront when everyone's happy and everyone wants to work together.
If you have a business that involves people, get advice from a professional.
May it be employees, contractors, or people that could be deemed employees, seek professional advice on handling in relation to your business. Consult an HR specialist such as Kristy Lee at Your People Powered Business. Such professional can offer a lot of guidance, templates and direct one-on-one support.
Reach Kristy Lee Billett at Your People Powered Business and The People Powered Podcast. Email me for questions and further inquiries.
Episode references:
ATO Contractor Decision Making Tool Link
Worker or Contractor Tool

Don't engage someone who's just a sole trader or partnership.
Have specific terms of engagement.
Before anything else, know ALL the risks by engaging with an advisor or a trusted accountant. Remember that the risk is all on the employer. If you're the employee or the sub-contractor that's doing the work, very limited can go wrong from you if there's anything that blows up. If you are the business engaging the contractor – you might find you are up for super, leave entitlements, workers compensation , payroll tax and a whole range of other costs.

Previous Episode

Money Moments with Mark Nagle

What are money moments? We talk to Mark Nagle, executive director at Treysta Wealth and Advisory, to answer this question and listen in as he talks to our host, Warwick Jackson, about people’s relationship with money—the good and the bad.

To guide you through this episode, here are some key takeaways from the conversation:
1. Surround yourself with the right people that add energy rather than take energy from you

Mark talked about inner passion and understanding what gives you energy, what saps your energy, designing your business accordingly and filling your week accordingly. If you love what you do and are surrounded by like-minded people, work doesn't become a chore-- it becomes far more sustainable.
2. Make a commitment to implement something

Business and career growth also means significant amount of training and conferences that cost money & timet. Once you get back to work, it is important to set aside time and make steps for implementation of what you’ve learned and what you can improve upon. Otherwise, you've just had a working holiday that's achieved nothing.
3. Money moments can be wonderful things, but can also be the sad things in life as well.

Mark talked about a variety of money moments, which is, basically, anytime money touches our lives. From holidays, home ownership, rent, parents with money, rental to buy, retirement, helping your kids, to marriage or divorce, all these things are money moments. Whether they're good or bad, they will potentially lead to anxiety. To help you manage “money moments”, just be aware of these things and have someone in your life, such as a Mark or someone that's a trusted advisor, where you can sit down and talk through the situation, make a plan and have an informed decision.
4. Take action sooner.

Often, many people will face some anxiety or stress in making a big decision for your career or in life that sometimes, the uncertainty is just too much to overcome. Because of this, some may push back in making decisions which will then result to months or even years of nothing. If you are too scared to take the next step, find a professional or a trusted advisor that can guide you to an informed decision. Come up with a plan and take action – invariably, the downside is never as bad as you think.
5. Technology designed with the client in mind.

Tech is an important part of business, but making sure that it is designed with the client experience in mind makes it more personalized and improves business relations. Use technology to you and your clients’ advantage.

Have any questions for us? Reach Warwick Jackson through [email protected] or follow our Facebook account: https://www.facebook.com/Gettothecontest and visit https://www.gettothecontest.com/ for more.

For more on Money Moments, reach out to Mark Nagle through their website www.treystawealth.com.au or follow their Facebook: https://www.facebook.com/treystawealth and Instagram @treysta.wealth

Next Episode

Are your Contractors really Contractors? Part 2

Don't engage someone who's just a sole trader or partnership.
Have specific terms of engagement.
Before anything else, know ALL the risks by engaging with an advisor or a trusted accountant. Remember that the risk is all on the employer. If you're the employee or the sub-contractor that's doing the work, very limited can go wrong from you if there's anything that blows up. If you are the business engaging the contractor – you might find you are up for super, leave entitlements, workers compensation , payroll tax and a whole range of other costs.