What Is a Subcontractor Australia

Many subcontractors, especially when it comes to artisans, operate as sole proprietors. As a sole proprietor, there is no separation between your business and your personal finances when it comes to taxation. As an employee, you are entitled to sickness benefits, vacation pay and even pension contributions, but as a subcontractor, you cover all these costs yourself. You are also responsible for taking care of your own tax affairs. For many artisans and other craft and service workers, there will be a time in your career when you decide to switch from employee to contractor. Another form of coverage that should be considered by subscribers is income protection insurance. This coverage is optional for many subcontractors, but some jobs and construction sites make income protection mandatory. For more information, see our Guide to Subcontractor Insurance Requirements. Becoming a subcontractor can be done in several ways. Some workers will simply move from an employee to a subcontractor of the same company, while others will start subcontracting to different companies.

Some fundamental differences between employees and contractors are as follows: As a subcontractor, you will only be paid for the work you do, so it is important to set aside money for vacation and sick days as no one else will pay you for that time. From the employer`s point of view, it is very important to ensure that a subcontracting agreement is legitimate. If this is not the case, despite a written agreement, a subcontractor may be considered an employee (taking into account relevant tests) by courts and/or authorities such as the Australian Tax Office. For example, if the subcontractor is considered an employee by the Australian Tax Office, the employer may be held liable for distribution payments that should have been made, as well as interest and penalties. The employer can then also be held retroactively liable for the retirement pension and any other claim/payment that the person considered to be an employee should have received. Becoming a contractor can certainly be financially rewarding for tradespeople and other workers, but be sure to do your homework first to make sure the transition goes smoothly. Most subcontractors, especially craftsmen, require liability insurance. This type of insurance covers you for property damage or bodily injury that you cause as a result of your work. Many craftsmen are not allowed to enter a construction site without liability insurance. Government buyers are looking for good value in their procurement activities. They often bid on large companies and expect small companies to play a role in the delivery of these contracts, usually as subcontractors. The prime contractor may be looking for professional skills or experience that you can provide.

Whether it`s a month off tools or years of work due to injury or illness, income protection is crucial for subcontractors and even more so for a craftsman exposed to great risks on the job site. There is not necessarily one structure that is better than the other, but there are certainly advantages and disadvantages for the average craftsman or subcontractor. If you continue to become a subcontractor, you will also need to talk to a tax advisor about the structure of your business and tax issues, as well as an insurance broker to find out what types of insurance you need. Once you`ve decided to become a subcontractor, you need to determine which business structure is best for you. The last consideration we will look at is the insurance of subcontractors. As an employee, most of your insurance questions are taken care of, but as a subcontractor, you are responsible for your own insurance. You will need to choose your own business structure, which will affect your tax and other financial matters, as well as other responsibilities such as insurance and retirement of your subcontractors. Find out what your rights and protections are as an entrepreneur. Income protection remains important for employees, but even more important for subcontractors. .