Learn how to be a contractor
A thriving market and the freedom of flexible working arrangements make contracting an attractive career choice – either short term or long term. Those with specialised skills can find opportunities across a wide range of organisations and enjoy numerous benefits.
We explore the world of contracting – covering everything from the advantages of this career path to the essential skills you'll need and how to get started.
The benefits of working as a contractor
According to responses to a recent Hays poll on LinkedIn, the main benefit of being a contractor is being your own boss. As an independent contractor, you can largely choose where you work, when you work and who you work for.
As a contractor, you can set your own rates within the market’s parameters. If you offer your services on an hourly basis, this usually results in a higher annual income, which was rated as the second-best benefit in the recent poll.
The steps you should take to become a contractor
1. Make sure being an independent contractor works for you
Becoming a contractor comes with both advantages and challenges, so it’s important to assess whether this path is the right fit for you. Consider seeking professional advice before making your decision.
Can you effectively manage your schedule? Are you comfortable with the requirements of professional indemnity insurance? Do you know the most efficient way to pay yourself? Are you proactive in securing new projects?
We have a list of six questions you should ask yourself when contemplating whether or not you should consider a move to contracting.
2. Prepare to leave your permanent job
Working as a contractor alongside your current permanent role is a smart way of building up a portfolio of work, but with the safety net of a regular income. Check first that your contract with your existing employer allows for this.
You need to be ready to move on from your existing position when the opportunity presents itself. The world of contract work is fast-paced, so you should be ready to grab new opportunities quickly when they arise.
3. Think of how you want to set up as a contractor and clarify your tax position
As a contractor in Australia, there are a number of obligations you must consider from tax point of view.
Firstly, you are responsible for putting aside money to cover the tax you owe. You must complete and lodge activity statements you get from the ATO.
You must report and pay GST on any activity statement if you’re registered.
You must keep records of your income, including invoices you issue, and any corresponding business expenses incurred.
You will be responsible for your own super unless you are contractor eligible for the super guarantee (SG) depending on your work arrangement.
You must ensure you have the relevant insurances in place including personal income protection for yourself and worker compensation for anyone working for you.
You will need to put money aside for any holidays or sick days you might have.
And finally, you’ll need to work out if you’re receiving personal services income.
*Please note, this article is not intended to offer financial advice in any way, please check with the relevant government websites for further information.
4. Find an accountant and set up your banking
Using an accountant may cost money, but they can keep your accounts in order and avoid any complications with your tax bill. Accountants are especially useful if you have set up a limited company, both for tax purposes and to make sure you have the right type of bank account.
5. Create your contractor portfolio and online presence
A Hays poll revealed that 52 per cent of the 10,045 respondents believe the ability to build and maintain relationships is the most important capability for a contractor.
Are you active on LinkedIn and comfortable in reaching out to your network? Having a strong online profile and portfolio can make it easier to connect with new clients. Start with our personal branding checklist:
- Make sure your LinkedIn profile is complete: Choose a high-quality and professional profile picture, fully optimise your headline and create a summary that helps you stand out.
- Remember to show your personality: Use a friendly and authentic tone, add personal facts or hobbies, and share your vision and values.
- Have an active online presence: Post relevant content, engage with other users, join groups or communities, and reach out to potential contacts to make your account more visible.
- Consider creating a website or blog: Try purchasing your own name as a domain. Add examples of work, a brief bio, a contact email address, and links to the rest of your online presence, such as LinkedIn or Facebook.
Can I learn more from recruitment agencies like Hays?
The expert team at Hays can offer invaluable advice on becoming a contractor and how to establish your career. Read more of our career advice, search for jobs or reach out to us today.