When you become an IT contractor with Paxus, you have the opportunity to choose which contract engagement suits you best.
There are three engagement options available:
PAYG Contracting
Pty Ltd Company
Management Company (commonly known as an umbrella company)
PAYG (Pay-as-you-go) Contracting
This is the simplest of the three engagements. If you prefer to sit back and let us take care of things, this is your best option. Paxus will take care of time consuming and costly administration commonly associated with being a contractor.
What do we take care of?
Deductions for tax
Payment of your Superannuation
Guarantee Contributions is made on top of your contract rate
Single Touch Payroll (STP) reporting
Provide weekly pay advices
Payment of applicable allowances
Any deductions for Government agencies (for example HECS or HELP)
Maintaining and adhering to legislative obligations, for example your tax, super, recording keeping, ATO audits
Administration of Public Liability and Professional Indemnity Cover
Plus, you can still access ourPaxus Benefits Program, including free access to tech training and books, footy tipping, discounted gym membership and more.
Why use this method?
Cost Savings - management companies will charge you for setting up your own company or fees for administering your company
Simplicity - submit a timesheet and that’s it!
Time - payment of taxes, super, administration and so forth
Legislative obligations and responsibilities - there’s no need to keep up-to-date with changes to super, tax, or insurances as we’ll take care of this for you
Pty Ltd Company (Company Contracting)
Pty Ltd Contracting is an ideal option if you prefer the flexibility and control of running your own company.
As a Pty Ltd company, you'll need to:
Register your ABN for GST
Be incorporated – have an ACN
Provide and administer worker compensation insurance
Acquire Professional Indemnity and Public Liability Insurance.
Paxus can supply this for you at competitive rates
Administer your own and any company employees’ superannuation
Complete BAS statements as required for the ATO
Administer any work cover claims
Contract under the increasing legislative challenges associated with the Alienation of Personal Service Income test (also known as the 80/20 rule)
Adhere to any legislations
In order to comply with the above requirements, you may need to work with your accountant to set up the company. If you don’t have your own PI/PL cover, you can access the Paxus cover for a nominal 1% of your contract rate.
What costs are involved?
There are varied costs involved, including your time, to self-manage contracting as a Pty Ltd.
Paxus recommends carefully consulting with your accountant before choosing this option.
Before you start as a Pty Ltd contractor, we simply need to verify your company. Under legislation, you will need to complete and provide us with the following paperwork:
Signed contracts (two signatures
required)All relevant paperwork in the Pty Ltd Induction Pack
A copy of your company Workers Compensation Certificate
A copy of your ID as evidence of your eligibility to work in Australia (Passport or Birth Certificate and Photo ID)
Company bank account details
A copy of your ABN number and ACN copy of company certificate
Public Liability and Professional Indemnity Cover
Management Companies
Management companies are ideal for high earning contractors who can afford the fee structures and want the same financial benefits of Pty Ltd contracting without the associated risks and time spent doing it yourself.
Specialist contractor management companies provide services to independent contractors that can perform a wide variety of tasks, including:
A company tax structure to work with
Tax advice
Administration support
Workers compensation, public liability and professional insurances
What costs are involved?
Fees vary from company to company. Generally these costs can be up to 3-7% of your rate.
Before you start, make sure you have registered with a contractor management company and that they have provided the correct paperwork has been submitted to us in order to get paid on time.
If you have any questions regarding this type of contracting, please contact your accountant for advice on selecting the best contracting method for you.
Which IT contracting option is best for you?
When making your decision, consider your personal and financial circumstances carefully. The following guide is intended to be used as an indicative outline only. We encourage you to undertake your own due diligence and seek professional information or advice from your financial advisor or accountant before deciding on your preferred engagement method.
If you are an Australian resident, you are able to choose any option that best suits your needs. Seek further advice if you are a non-resident, however most non-residents choose to contract as a PAYG.