payg or self employed
- Thread starter BMan
- Start date
I'd probably take a 3rd option - find a payroll company and get your employer to contract with them and effectively you're a PAYG employee of that payroll company. Speak with your accountant to see if this arrangement is tax effective for you of course...it's easier than having to sort out BAS, invoice the employer, PL/PI/, workers comp etc etc. In fact it ended up cheaper in my case due to the lack of paperwork on my end.
i was thinking you would be getting all your cash upfront rather than building up annual leave and getting paid super
while im younger i could use that money more effectively.
and it you took holidays its no different to getting paid annual leave anyway as your getting it paid in your wage...
while im younger i could use that money more effectively.
and it you took holidays its no different to getting paid annual leave anyway as your getting it paid in your wage...
To an extent, though there are things like long service leave as well. When times are good and you have back to back contracts, say, you don't get much time off.
Your problem will be in an economic downturn. Contractors are more expensive and easier to fire. So they get cut first.
Also, employers usually give employees more training than contractors. So if you are young, skilling up may result in higher pay in the long term.
$15/h wage increase looks pretty good though even after all the other super, long service,leave loading etc its still about $10/h more
i hear what your saying but this is probably not your standard contractor type setup
It is actually very difficult to obtain an ABN (without lying) if you are doing work as a contractor but in reality you are an employee.
There is also a misconception that working as a contractor means that you have to look after your own Workcover and Super. In reality the employer is still liable for these and also payroll tax except in very limited circumstances.
There are copious examples of an employer thinking he is getting off paying these liabilities until the audit comes or the employee gets pissed and complains to the relevant body.
Usually it's just not worth the hastle.
If it looks like a duck and quacks like a duck then it usually is a duck - same thing for an employee.
There is also a misconception that working as a contractor means that you have to look after your own Workcover and Super. In reality the employer is still liable for these and also payroll tax except in very limited circumstances.
There are copious examples of an employer thinking he is getting off paying these liabilities until the audit comes or the employee gets pissed and complains to the relevant body.
Usually it's just not worth the hastle.
If it looks like a duck and quacks like a duck then it usually is a duck - same thing for an employee.
I agree with the others that it depends on your situation. If you can contract for multiple businesses then it's not a bad thing as you can diversify your revenue base. If it's just on the one company, then you have to fend off the PSI rules plus it's easier for your contract to go bye-bye and impact your business.
"It depends"....Agree with that view.
I regularly see contractors who are employees. I really feel for these people. They are the working poor. They are being taken advantage of by greedy employers seeking a cheap deal. They make it seem attractive to contract. Truth is 20% of income can be lost in costs and many contractors end up not paying 9.25% super and are financially disadvantaged. They surrender work "rights" and entitlements - Just like those poor buggers pushing trolleys outside Coles & Woolies. You think those guys are making $$ by being a conractor. No way. Its a way to bypass workers comp and premium risks from working around cars !! They get stuck with the GST, the workers comp problems and even insurance claims that are refused. They have financial uncertainty and find finance hard to obtain. No paid holidays. No sick leave. But if they dont work the contract is terminated. How is that fair ?
I have a client who thought he was clever by using the contractor route and despite PSI issues throught he was on a winner. After 13 years they terminated the arrangement. Overnight. No notice. No payout. He had to fight for his entitlements as a common law employee and they promptly agreed. But he only got 60% of what he considered was the full entitlement. Solicitors agreed that fighting for more was his risk. And he paid full tax on it all. No redundancy !! So in time he lost.
If you need to consider "will I work as a contractor ?" then answer is probably no. A true contractor doesnt need to ask. If a "employer" raises it first there is even greater reason to appropach with caution.
I regularly see contractors who are employees. I really feel for these people. They are the working poor. They are being taken advantage of by greedy employers seeking a cheap deal. They make it seem attractive to contract. Truth is 20% of income can be lost in costs and many contractors end up not paying 9.25% super and are financially disadvantaged. They surrender work "rights" and entitlements - Just like those poor buggers pushing trolleys outside Coles & Woolies. You think those guys are making $$ by being a conractor. No way. Its a way to bypass workers comp and premium risks from working around cars !! They get stuck with the GST, the workers comp problems and even insurance claims that are refused. They have financial uncertainty and find finance hard to obtain. No paid holidays. No sick leave. But if they dont work the contract is terminated. How is that fair ?
I have a client who thought he was clever by using the contractor route and despite PSI issues throught he was on a winner. After 13 years they terminated the arrangement. Overnight. No notice. No payout. He had to fight for his entitlements as a common law employee and they promptly agreed. But he only got 60% of what he considered was the full entitlement. Solicitors agreed that fighting for more was his risk. And he paid full tax on it all. No redundancy !! So in time he lost.
If you need to consider "will I work as a contractor ?" then answer is probably no. A true contractor doesnt need to ask. If a "employer" raises it first there is even greater reason to appropach with caution.
Yes. Poor us. Us contractors certainly are the working poor and really struggle through life.
It all depends on your personal situation and the role you are taking on, and the industry you are in. 1,000s of variables.
I was talking to my boss, who is the highest positioned contractor with the company. He can't go higher, without becoming an employee.
I asked why he didn't take the position offered
He said "for the company's 20th birthday every employee got an iPad. I got a porche".
So yes, us poor contractors sure do get the short end of the straw.
Is the uplift is net salary worth the risks (job Security, super, bonuses, paid leave etc etc etc). Well, it all depends
Blacky.
Some contractors are contractors because their employer don't want the burden of hiring them as employees.
Some contractors (usually with specialist skills and experience) are contractors because their employer needs them it's easier to justify hiring a contractor, saying it's only temporary, than an employee. In practice, especially in good times, they end up staying at contractor rates.
Bman, while an extra 30, 35k is great now, you have to ask whether a few more years as an employee getting trained up will mean you're more likely to get those high level contracts in the future. The sort that pay 1k a day.
Some contractors (usually with specialist skills and experience) are contractors because their employer needs them it's easier to justify hiring a contractor, saying it's only temporary, than an employee. In practice, especially in good times, they end up staying at contractor rates.
Bman, while an extra 30, 35k is great now, you have to ask whether a few more years as an employee getting trained up will mean you're more likely to get those high level contracts in the future. The sort that pay 1k a day.
i dont see my wage increasing anymore apart from yearly cpi increases, hence looking at the contracting option.
it wasnt brought up by my employer
it is just a std job but a guy there currently does it as a contractor and gets a good wage because of it
im looking at taking that job over in the next 5 years and thought that the pay difference would be well worth it
it wasnt brought up by my employer
it is just a std job but a guy there currently does it as a contractor and gets a good wage because of it
im looking at taking that job over in the next 5 years and thought that the pay difference would be well worth it
As usual a lot of crap is being spouted by people who think they know ......... but have little personal experience to rely on.
FWIW I previously worked as a contractor / consultant since the late 80s and whilst working with several companies have been requested to join staff. The usual response for them to 'match my package' has resulted in a "we can't do that because then we would have to pay x, y and z the same or that it is outside the salary range for the position".
Know thyself and don't sell yourself short!
Work as a contractor or consultant can be very beneficial if you keep abreast of the market and are good at your job. It also keeps you on your toes and prevents you from becoming complacent.
A good contractor will always be kept longer than a mediocre employee.
A good employee can also make a very successful career progress, however, if progress starts to stall they also should re-evaluate and possibly put themselves 'out there' to re-kick start their journey.
I have personally seen many good staff people become too pre-occupied with job comfort/security and other issues, that they get in a rut and can't move above it even when they dislike their jobs.
As one gets older this becomes especially more pronounced.
The best thing a young professional (or other) person can do after they have gained 5-10 years experience is to put themselves 'out there' with the rest of the market to sort themselves out.
A go-getter will always stand apart and get the best opportunities.
FWIW I previously worked as a contractor / consultant since the late 80s and whilst working with several companies have been requested to join staff. The usual response for them to 'match my package' has resulted in a "we can't do that because then we would have to pay x, y and z the same or that it is outside the salary range for the position".
Know thyself and don't sell yourself short!
Work as a contractor or consultant can be very beneficial if you keep abreast of the market and are good at your job. It also keeps you on your toes and prevents you from becoming complacent.
A good contractor will always be kept longer than a mediocre employee.
A good employee can also make a very successful career progress, however, if progress starts to stall they also should re-evaluate and possibly put themselves 'out there' to re-kick start their journey.
I have personally seen many good staff people become too pre-occupied with job comfort/security and other issues, that they get in a rut and can't move above it even when they dislike their jobs.
As one gets older this becomes especially more pronounced.
The best thing a young professional (or other) person can do after they have gained 5-10 years experience is to put themselves 'out there' with the rest of the market to sort themselves out.
A go-getter will always stand apart and get the best opportunities.
I was many years as a contractor before going out into business.
I did well as a contractor. I did have some limited opportunities to retrain- but not a lot.
It's been difficult to get back into IT given such a big gap. But now going back (pending clearance) I'm quite happy being a PAYG employee. I'm effectively a beginner again. The company provides a lot of training support and strongly encourages people to seek further training.
Many jobs in IT in Canberra now require security clearance. This can only be gained when sponsored by a company- usually for employees. The company is providing this.
I did well as a contractor. I did have some limited opportunities to retrain- but not a lot.
It's been difficult to get back into IT given such a big gap. But now going back (pending clearance) I'm quite happy being a PAYG employee. I'm effectively a beginner again. The company provides a lot of training support and strongly encourages people to seek further training.
Many jobs in IT in Canberra now require security clearance. This can only be gained when sponsored by a company- usually for employees. The company is providing this.
It depends alot on your industry and type of work but i've been a contractor for 10+years in the health field and wouldnt swap to employed.
why ? higher take in pay, which i can decide how much i want to contribute to super, and more tax deductions. Sure there is less job security so you need to balance that against the higher pay.
why ? higher take in pay, which i can decide how much i want to contribute to super, and more tax deductions. Sure there is less job security so you need to balance that against the higher pay.
I am kind of in this predicament. I have a registered company, but it feels like I should be paying less tax and would be better off as a sole trader. My reasoning is that I bring in the sale, I bill client from the company, company pays the payi tax then I have to pay again with payg. Could I just skip the payi if I was paying myself directly?
