Why do you need to sign an Independent Contractor Agreement?

An Independent Contractor Agreement is a very important part of any contract agreement. It’s a written agreement that clearly defines the roles and responsibilities of your professional relationship. So, whether you are an independent contractor or you plan to use one, there is a need to have an independent contractor agreement signed.

Some reasons to sign independent contractor agreement include:

Worker Clarification: An independent contractor agreement helps to clarify contractor role in your organisation. As an employer, incorrectly classifying an employee may have significant tax implications for your business. Therefore, if you a worker is an independent contractor, clearly defines them as such in your agreement.

Deadlines: Since deadlines cause serious problems between employers and independent contractors, employers can use the independent contractor agreement to state the expected deadline for production and the penalties for failing to deliver on time.

Responsibilities: Signing an independent contractor agreement simply means both parties have agreed on the exact nature of the work to be completed. You can use it to define materials to be used, expenses, workspace, development, delivery and any other details of the work.

Payment: The independent contractor agreement can also carry the payment method and amount for the work to be completed.

Therefore, it can be said that signing an independent contractor agreement for contractors in Australia is a must for any employee as it helps to keep things organized. This agreement also helps to differentiate the roles of the contractor and that of your workers.

Benefits of Independent Contractor Management Service

Independent Contractor management services are services and technology that can be used to eliminate the burdens of payment processing, back-office administration and managing compliance work flows for companies that make use of independent contractors.

These are very important tools that help to aid office automation, making the work flow easier. Some benefits of using the independent contractor management services for independent contractors in Australia include:

Easy Payment: With the use of an independent contractor management service, making payment to contractors becomes very easy. You can have the scheduled payment time and amount put into the system and the payment is carried out automatically when its time.

Contract Renewal/Elimination: Renewing of contract agreement has never been easier. The independent contractor management service makes renewal very easy, prompting you a few days to contract renewal so you can decide if you want to renew or cancel instead of having the contract automatically renew.

Consistency: This is perhaps the most important benefit of using this service. It allows you to know if you are using the right contractor by keeping a track record of previous independent contractors. It also helps to keep a standardized and consistent contract terms and condition.

Compliance: The use of independent contractor management service also helps to monitor compliance. This service makes sure the duties assigned to a contractor are met as both an employee and as a third party. It ensures effective management of contractual commitments.

A contractor management service helps to provide accurate and timely screening information so as to ensure contractors are a strong fit early in the process.

At Certica, we believe in choice and responsibility, increased flexibility and mutually beneficial relationships that can only be fully realized by contracting the right way – simply and always compliant.

Independent Contractor Management Services

Independent contractor refers to one who provides their services and works to a business on a contractual basis. An independent contractor agreement is drawn up when a person is contracted to perform a service independently as an outsider of another person, business etc.

Independent contractors are not hired for any company but work on a project-to-project basis. A contractor hired own services through bidding and companies get a good contractor at economic choice. You can hire independent contractors for specific tasks such as making home construct building and etc.

Independent contractors enter into an agreement with a business through a written contract that details the duties and responsibilities of each. Their career depends on consistently get over high-quality work, where one bad performance can end their reputation and endanger future assignments with a company.

Managing an Independent Contractor

• A contract must be revisited periodically
• Set a pay rate and cap the time in increments of a few months
• Setting really clear expectations from the start
• Tax obligations
• Business activity statements
• Superannuation and your contract: If the hirer is required to pay your Superannuation Guarantee contribution, your contract price may change to reflect the extra expense to the hirer.
• When the contract ends: work is complete and you have been paid.

Certica® help manages these issues, making it simple and compliant for contractors and the businesses that engage their services and professional team enhances and provides certainty to any contracting arrangement.

Tax obligation for Self-employed Contractor/Independent contractor in Australia

As a self-employed contractor, you're running your own business. You need an ABN, and you need to pay tax and the superannuation. You're not entitled to paid leaves, and you may have to pay the cost to fix any damage caused by you. You can be a self-employed, or working for your company or a trust. Knowing your tax obligations from the start can save you time, money and stress.

There are specific rules for independent contracts to ensure that you do not use business structures to avoid your income tax obligations. It is important to discuss with your accountant, contracting consultant or the government Taxation Office to ensure you understand your tax obligations. If you’re a sole trader or a partner in a business, you don’t have to make super contributions to a fund for yourself. Your super fund can accept personal contributions from you if it has your TFN.

Tax File Number (TFN)

A tax file number is unique. Issued by the ATO, use to administer the tax. If you are operating as a sole trader, you use your individual tax file number. And if you’re in a partnership or registered company you will need to apply for separate tax file number.

Australian Business Number (ABN)

Independent contractors Australia needs to have an Australia business number to use when dealing with other business. If you don’t have Australia business number before taking work, your hirer may legally hold the Medicare from your payment.

Goods and Services Tax (GST)

If you are the independent contractor you need to register for goods and services tax. It is applied to most goods and services sold in Australia. So it’s like your services to Goods and services.

Australia Business Explained

An Australia Business Number explains when you register with the Australia Business Register. The Australia business number is unique 11 digit number that identifies your business to the government and community.

ABN for Business

If you are running your own business, then you need an Australia business number.

Register for the ABN.

•          Register for goods and services and your business name
•          Get an AVS keys to transact online with government agencies

 Benefits for business

•     Government use Australia business number information to build an understanding of business demographics in your local area.
•        This help to guide services delivery, plan and manage infrastructure and provide recovery for you and your community.
•     Pay tax on time, and it will help for business as contractor compliance and also help the government.

Important Things That We Need To Known about Independent Contractor

Independent contracting is a standard business practice, and many people and businesses are taking advantage of the same. Now days, it is trendy and most popular in all around the world. A small business or start-up or government office engage independent contractor to do his work.

Independent contractor is also stated as self - employed. But there is critical point to hire an independent contractor is contractor agreement. It is the back bone of the relationship between independent contractor and business. In it, the entire clause of fee like monthly, hourly, weekly is specified. In agreement, form of commission was also including which help later to negotiate with client if he is not pay.

Independent contractor are not actually employee but they receive their payment according to the business work.

Independent contractor are not placed as employee payroll, so they need to give entire invoice to the client he performed work and his engage client pay him through account payable.

There are special tax rules for independent contractors:

a) Tax file number: Unique number issued by ATO (Australian Taxation Office)

b) Australian Business Number helps to run business

c) Good and service Tax

d) Personal Services income.

e) Payroll Tax

The idea to engage independent contractor to do outsourced work is cost & time effective. Independent contractor work in various industries, like broker, manufacture, consumer product and many more but they only focus on work and have no time to manage their finance. For this Certica, offer service to manage your finance and the payment you received. And his certified contractor administration system provide compliance with ATO and other taxation service to make your contractor ready

Importance of Contractor Management System

Contracting is a basic need at all stages of your business from a Startup to an Enterprise level. You may be a self-employed individual who needs some helping hand for the lack of specific skills, and you can go and hire one. When you become a small enterprise, you may need small groups of contractors to work with you on your project.Once you become an enterprise, your requirements are large. You may be managing a large construction site and may need hundreds of workers to work on this project. The same applies to a Corporate or a Government Office also where they always need contractors in large number. For all these types of businesses, what is common is your need for Contractor management system.

The reasons for choosing a contractor vs. an employee could be related to many parameters. The first and most important reason is the duration of a particular task. If the task I going to get over in few weeks or few months, you don’t want to employ someone and keep worrying about what work you will offer this person after the current project is over. Apart from duration, there are other reasons of costing and facilities you need to provide to an employee. There could be reasons related to filling a temporary skill gap also.

It is always good to be ‘contractor ready,' which includes setting up rules and regulations for contract employees. It also includes setting up a process for the contractors to work efficiently and complete their assigned tasks within the framework of your Company. The compliance with Government and other bodies is a necessary condition you have to fulfil. The ‘Certica’ can help you for entire contractor process from finding the contractors, getting their contract documentation done and managing them through a Contractor management system. All these services are extremely important for an entrepreneur, and you can also be a happy client of Certica.