Accountancy Reimagined

  Last time we discussed the differences between an employee or a contractor relationship, this week - why does it matter? At it's simplest, the reason why this matters to you as a business owner is to ensure that you are complying with your obligations and are not surprised at a later date.  Even if you operate your business through a company, this is one of the areas where Director's can be held personally liable. The main items that you need to be sure are treated correctly are Pay As You Go Withholding (PAYGW) and Superannuation Contributions (SGC).  If you engage a true contractor and they provide a valid ABN, then your business has no requirement to apply PAYGW or make SGC payments. If the contractor does not provide a valid ABN then all payments are subject to PAYGW at 47%. If the engagement is that of an employee then both PAYGW (at appropriate marginal rates for the employee) and SGC payments are required from the business. The third category which can trip peopl...

Last time we discussed the structure that your business could take.  Today we're going to look at a common issue when the business is just starting to grow.  Are you engaging people as an employee, or as a contractor. B oth relationships are crucial to business operations, but understanding the distinction between them is important—both for employers and workers alike. But what’s the difference, and how do these distinctions affect taxes, benefits, and rights? Let’s break it down. What is an Employee? An employee is someone who works for a company or organisation under an ongoing or fixed-term employment contract. This arrangement means the employer controls the nature of the work, how it’s done, and when it's done. Key Characteristics of an Employee: Ongoing Relationship : An employee generally works on a continuous basis, often with an indefinite term unless specified otherwise (e.g., a fixed-term contract). Control Over Work : The employer ...