Are your Contractors really Contractors? Part 2

08/13/21 • 35 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

Are your Contractors really Contractors? Part 1

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.

Next Episode

6 Marketing Things to Consider When Selling Your Business: Part 1

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In another two-part episode of Get to the Contest Small Business Podcast, listen in as I talk to Melanie Unwin, Director at Mogrify. We discuss the marketing aspects of selling your business and making your business attractive to a potential acquirer.

Below are some key learnings that will be valuable to business owners who are in the process of selling their business or want to sell in the future. So, make sure to check out Parts 1 and 2 of this episode and don’t miss out on hearing Melanie’s expert tips.

1.Have a clear plan.

It is essential that you have a clear plan if you are to successfully achieve your business and marketing goals. Get your reason, your purpose clear and from there, execute strongly. If selling your business in the future is part of your vision, put it in the plan from day one, document it and put it in front of the right people.

2.Make sure key people are on board with your vision and plan.

If you don’t have buy-in by all the decision makers in your business, your plan will fail. Having that buy-in is critical, otherwise people will just walk away from it—resulting in wasted time, effort, and resources.

3.Make the journey worth it

Selling a business can be difficult for many reasons. There’s going to be rewarding times, but there's going to be times of stress and challenges. So, make the journey worth it. Make sure you've got people around you who give you energy, are going to add to that experience, and not drain you.

4.If you want to be acquired, step up your game.

Take on more challenging work to show that delivering great outcomes is one of the core capabilities of your business, stand out to potential buyers. You want to show that you've got a culture and a skill set in your business that can drive innovation and can deliver projects. Make sure you are heard and seen by your target audience.

5.Invest in your people and in your own leadership

Be around people, co-workers, partners that give your life and energy. Cultivate a culture of learning and encouraging growth in people. This applies to your team members but also to you as their leader. Invest in yourself and your own leadership, but also invest in the people around you and develop them.

6.Say it, do it.

This is one of the core values and core culture points of Mogrify. If you're living this culture in your business, it means that you can be relied on. Team members at Mogrify live by this culture—if they say something and don't deliver, they're not living the values of the company.

7.Let it go.

Don't invest energy on what you can't control. Now, that’s easier said than done, but you must practice letting go of the things you can’t change and move on from it.

Find Melanie Unwin on LinkedIn or check out their website www.mogrify.com

Have any questions for us? Reach Warwick Jackson through [email protected] or follow our Facebook account and visit Get To The Contest website for more.