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It’s crucial to understand the differences between an employee and a contractor (also referred to as an independent contractor or subcontractor) as this distinction affects your responsibilities, such as paying superannuation contributions.
In simple terms, employees work within your business and are an integral part of your operations, while contractors run their own businesses and provide services to yours. The key differences are as follows:
| Employees | Contractors |
| You control the work they perform | They control when and how they work |
| Recognised as part of your business, working on a regular, ongoing basis | Can accept and perform work for other businesses while engaged by yours |
| Paid according to the relevant award or contract of employment | Paid based on invoices and results achieved |
| Supplied with your materials and equipment to undertake the work | Supply their own materials and equipment |
| Represent your business | Represent their own business |
A recent Federal Court case has again demonstrated the complexities of determining whether someone providing services is an independent contractor or an employee – and how costly it can be to get this wrong.
At OUTRUN Accountants, we provide you with the necessary guidance to ensure compliance with these distinctions.
We’re also available to assist when making important purchases or business decisions, offering advice on the most effective ways to maximise your income while ensuring you pay the correct amount of tax. Our advice is based on over 20 years of experience working with contractors and consultants who are a key part of our accounting client base.
At OUTRUN Accountants, we value long-term partnerships with our clients and are eager to work with you as you grow your contracting or consultancy business. We specialise in small business accounting and taxation.
Contact us today on 1300 651 682 or make an online enquiry to schedule a free* initial consultation.