Contracting Basics.

I've recently had some stories come to me about friends (or friends of friends) being burned by nefarious schemers practicing unethical business. I feel really bad for my (friends of) friends, not just because they've been pushed out of pocket for no good reason, but also because if they'd come to me first, they might have had a few more tools to cope with the situation, perhaps even prevent it completely.

Here's a couple of things to keep in mind if you are planning to get yourself an ABN and go the route of working as a sole trader. These are just some tips mind, not a complete overview - there's some extensive sources available from federal and media bodies - but if any of these points can save you a day of stress, then my job is done!



You don't pay to do your work. This is the first thing I always tell anyone registering for their ABN, and usually it gets met with a blank look - why would anyone pay to do their job? Well, it happen. Whether you're asked to temporarily pay a supplier's bill, or fork out for the advertising costs associated with your students, it's not right. You're there to provide your employer's business with a service, not capital.

Between a boss and a contractor, cashflow should be one way only; to the contractor.


Your terms are seven days. As a service provider, you likely won't have any source of income other than the invoices you send out at the end of your work week. Make sure you get to know who is processing your invoice and make sure they treat it as a wage, not a supplier or utility provider. Typically an office administrator will shelve an invoice until the end of the month, which means you could be waiting up for four or five weeks for the payment to be authorised. Your cashflow will not survive these kinds of delays, so make sure you (politely!) let your employer know that your terms are seven days, just like any other employee.

Your invoices need to be paid on time; as a sole trader, your cashflow is your livelihood.


Invoice on time! Whether you've invested in a bookkeeping program and fancy letterheads, or are writing them out in those little invoice/tax booklets, the important part is making sure that you've accurately allocated your time and have the invoice ready by the end of the week, or first thing the next week at the very latest.

If you're late with your paperwork, then so is your employer. Don't give anyone a reason to not pay you on time!


Claim your super. Contractors are entitled to superannuation! Under superannuation laws, if you look and smell like an employee, then for superannuation purposes you are an employee - there are very few situations where a contractor is not entitled to superannuation under these rules. Also, superannuation is always added after the gross salary/hourly amount, ie. an advertised contract for $100k should also include $9k super above the initial contract amount. Make sure to fill out the Super Choice form when all the other paperwork is signed; if you're not offered one, make sure to ask for it.

Superannuation may be a pain the arse, but it is a pain in the arse you're entitled to.


Hope this is helpful to someone, somewhere, sometime!

-Anthony


anyone?