You may have heard the word ‘contractor’ float around your workplace, but have you ever pondered what it means to be a contractor and whether it is for you? While you might feel more secure in your permanent job there are many benefits that you should consider if you are thinking of leaping from a permanent job to the wonderful world of contracting.
What is Contracting?
To keep this description short and sharp. Contractors are professionals who provide skills or services to companies for a set period. They may be contracted for a set time period, set number of hours over a time period or until the project they are working on is completed.
If the world of contracting has tickled your fancy here are some benefits you might get from leaping into the contracting world.
You’re Likely to Know Someone Who Is on A Project with You.
The New Zealand market is rather interesting, especially in Wellington. New Zealand is known for its two degrees of separation, and when you go contracting you are likely to work with someone who either directly or indirectly knows you. This can work in your favour. People move around different organisations and when doing so they may be looking for contractors for their projects. This is when your name could pop up in conversation due to you doing an exceptional job in your previous organisation. Always remember that the converse can happen too!
You Can Pick and Choose What Contracts You Take
As a contractor, you have the ability to pick and choose what contracts you put your name forward for. It can be great, as you can work on projects that you are passionate about and will enjoy. Some projects even allow you to complete some tasks remotely facilitating the ability to work from home.
While it is good that you can pick and choose what contracts to you should make sure that you don’t say “no” to everything. If you continue to turn down opportunities the agency staff are likely to promote candidates they know are flexible and come to the table with a “can do” attitude.
Significantly Higher Paycheck
When you are a contractor, you will get paid either a daily or hourly rate. For example, if you are on an hourly rate of $95 per hour X 8 hours a day X 5 days a week X 52 weeks a year = annual income of $197,600. If your skills are in demand or are very niche, you could have the potential to earn even more money due to the short supply of your skills.
While that dollar amount seems rather appealing there are many other costs you need to consider. These include: covering your own annual leave, sick leave, ACC and Kiwi Saver to name a few.
It is a smart idea to budget on doing less than 2080 hours (8 x 5 x 52) each year. Experience says 1800 hours a year is typical.
When contracting you may be able to get some tax benefits. As a New Zealand tax resident you can apply for a 0% withholding tax rate if you meet the following conditions:
- Are in business
- Have a good record of filing tax returns and paying tax
- Get schedular payments from a payer other than a labour-hire business under a labour-hire arrangement.
By doing this you are then responsible for paying your own tax which could sound daunting. But it also means that your money stays in your account for longer. You are able to earn more interest on your money while it is sitting in your account. The downside is you have to pay a lump sum of money towards your tax 3 times a year, under the provisional tax regime.
When working if you incur any business expenses you may be eligible for tax relief on those expenses. For example, if you purchase equipment in order to perform your work you will be able to account for these as business expenses to reduce the amount of your income that you need to pay tax on. If you are GST registered, you may also be able to claim the value of the GST portion of the expense.
Why use an Agent like Zephyr?
While you can go contracting directly to clients, you can also use an agent like Zephyr. Using an agent can come with many benefits. Here are some of the benefits you can get if you use Zephyr as your agent.
Zephyr Does The Marketing for You
- Let Zephyr do all the contract hunting for you. Our account managers are constantly talking to clients about the demand for skilled resources. It allows you to focus all your efforts on the job at hand rather than using your time/energy finding yourself another contract and doing the paperwork for it. It can be very difficult to scout for more work while completing your current assignment. If you wait until you finish your assignment you are guaranteed to have downtime with no income.
Public Liability & Professional Indemnity Insurance Provided For You
- Zephyr provides all our contractors and consultants with public liability and professional indemnity insurance when they start an assignment. This is one extra cost that you don’t need to worry about as Zephyr covers this cost for you.
Interface with HNRY NZ
- As a contractor one thing that you need to do yourself is taxes. These can be a pain especially if you aren’t numbers-savvy. At Zephyr, our contractors can either do their own taxes or use HNRY NZ. HNRY works as your accountant. Zephyr will pay your income into your HNRY account and HNRY will automatically pay your Income Tax, GST, ACC, and Student Loan so you don’t need to worry about your tax obligations. This gives you one less thing to stress about.
Support You When Things Go Wrong
- Zephyr can lend an ear to you when something isn’t going the right way. They will be able to provide help and when appropriate talk to the client directly about the issue. Zephyr’s directors have multiple years of experience in the consulting/contracting field and can provide invaluable help.
Other Benefits from Using Zephyr as An Agency Include:
- Monthly team lunches, this is a perfect opportunity to network with other Zephyr contractors.
- Welcome pack when starting an assignment
- Birthday morning tea provided by Zephyr to your worksite.
- Regular social events.
- Regular check in’s with our account managers.
These are just some of the benefits you can receive when you use Zephyr as your agent.
At Zephyr, we use Contractor Exchange to manage our talented resources. We use this system extensively to find talented resources to place with clients when they have demand for roles like business analysis, project managers, programme managers, developers, and change managers to name a few.
If you’re ready to leap into the contracting world fill in the form below and we will add you to Contractor Exchange and one of our friendly account managers will be in touch with you to talk about the wonderful world of contracting.