Employee or Contractor?
How have you engaged your staff? Whether they are a paid employee or a hired contractor, this difference matters. In this post, we review some key information that will help you keep your businesses staffing above-board and problem-free.
How have you engaged your staff? Whether they are a paid employee or a hired contractor, this difference matters.
In this post, we review some key information that will help you keep your businesses staffing above-board and problem-free.
Before You Hire
It's best to have your paperwork in order at the time of hiring. Know exactly how each person who works for you is represented on your payroll.
And earnings isn't the only important issue here.
How your hired help is classified determines how you pay them and if there will be associated on costs to your business. These costs can include Superannuation Guarantee contributions and employee entitlements.
This means that when it comes to reporting your tax obligations, your reports must accurately reflect the status of your workers.
Not sure whether your workers are technically employees or not?
Even if you've already done the hiring, it's not too late – just make sure you get things straightened out before reporting information for tax and insurance purposes.
Why It Matters
Treating hired employees as contractors might save you on labour costs but it also shorts your employees of the benefits they need and deserve as paid employees. There are penalties for untruthfully engaging employees as hired contractors.
The Australian Tax Office (ATO) has been cracking down on this matter lately to uncover cases of fraud. Even unknowingly, you wouldn't want to be found guilty of supplying false information about your workers.
There's another important area in which South Australian businesses need to be registered and pay insurance premiums for.
The Return To Work SA scheme was designed to get injured South Australians back on their feet and working. However, some employers have taken advantage of the system and avoid paying premiums by:
· Exaggerating the extent of their employee's injury
· Neglecting to report when the employee has returned to work
· Making claims for services that were never provided to the employee
This behaviour is not only illegal, but it also carries implications for other employers paying for this insurance. The premiums go up for everyone when just a few abuse the system.
What You Can Do
If you're one of those businesses who operates by a policy of honesty, then we commend you. But remain alert to the employees and contractors issue that we’ve discussed.
We're referring many of our clients to the ATO's online decision tool. This tool has been designed for people like yourself who pay others for their labour.
The online decision tool is a great starting point for helping you figure out who on your team is an employee and who is a contractor when you need to report such information for tax purposes.