We don’t employ people through their ABN because it’s inherently dangerous – both for them and for us. The ATO is quite at liberty to ‘deem’ ABN income as taxable at source, which can lead to severe problems. Even so, many organisations are happy to take the risk and will insist that they pay you through an ABN. We think that could potentially put both the organisation and the individual at unnecessary risk.
If we approach you with work, we’ll always offer you the choice:
- Work through your own Pty Ltd company, or
- Have us employ you PAYG and take care of your tax, super, etc, at no cost
… but if you find your own work (either direct to a client or through another agency) and they want you to use an ABN, what can you do then?
You can ask us to ‘payroll’ you instead of risking the use of an ABN.
That means that we invoice your client, they pay us, and we deal with your tax, super, etc and pay you. It’s as if HCi is your own Pty Ltd company. This mitigates the risk of the ATO coming down on you, and also means that you can have the reassurance of getting paid on time by HCi instead of worrying about when/if your client will pay.
And you’ll be covered by our insurances (worker’s comp, professional indemnity) so you won’t have to worry about that. In fact, if there are any issues with the client, their contract is with us, not you.
Just so we’re clear, we will of course be charging a fee for this. (This doesn’t change the way we hire you for other work for our clients: we won’t be adding any additional fees – it’s all part of the service. The fees will only apply if you bring us the client and ask us to do the payrolling.)
How to start
Here’s what we’ll need from you for each client:
- Company name and ABN
- Estimated start and end dates
- Your rate to the client (daily or hourly)
- Who you’ll be reporting to at the client, and their email address (for our timesheet system)
- A name and email address for the person who’s going to sign the contract
- Address where you will be working (for payroll tax purposes)
- Likely number of hours/days of work (just so we can do estimates)
We’ll send a contract to the client and when they sign it, we’ll send you a contract between yourself and HCi. Then we’ll set you and the client up on our Astute online timesheet system.
When will you get paid?
We’re offering two options for this service:
- PG: payment guaranteed – you get paid a week after the timesheet is approved, regardless of when your client pays us
- POR: pay on receipt – you get paid a week after your client pays us; and if they don’t pay us, you don’t get paid
Of course we charge more for the PG option because we’re taking a risk of non-payment, and we’ll also have to do a credit check on the client, and possibly make them pay in advance or give a personal guarantee – all standard stuff we already do with our clients, by the way.
What kinds of fees?
We’re offering the POR service at a low standard percentage (call us to discuss it), but the percentage for PG will depend on how risky we think your client is.
We also make deductions for payroll tax and worker’s comp insurance, and these will depend on which State you’re working in.
But basically we bill your client at whatever rate you quoted them, then deduct:
- Our fee percentage
- Payroll tax
- Worker’s comp percentage
… and then pay the balance to:
- The ATO (at a rate set by them, of course)
- Your nominated super fund (at the current minimum super rate)
- Your nominated bank account
All you have to do is spend the money!
Who owns the client?
One issue that often comes up is: if I introduce my client to HCi, will they steal them from me? The answer is of course no.
If you bring us a client that we’re already dealing with, then there’s no question: we already deal with this client, and so we’re happy to payroll you to them, but we’ll continue to sell other services to them as we did before.
If you bring us a client that we haven’t worked with before, then there are three options:
- We can just agree not to deal with them in future (or at least, while you’re working there), or
- We can reach an agreement with you to pay you a percentage of what we make out of the client on other sales, or
- We can pay you a percentage, and also agree not to offer any services that compete with what you do
Want more information?
Just give us a call and ask to talk to Phil Cohen, or after hours fill in the form on our contact page and we’ll be in touch.
Note: We’re not lawyers and nothing on this page should be taken as legal advice. We also don’t give financial advice because we’re not financial advisors.