As the gig economy continues to grow, more and more people are choosing to work as independent contractors rather than traditional employees. While this arrangement can offer greater flexibility and potentially higher pay, it also comes with unique challenges and considerations. Whether you are considering taking on contract work or are already a seasoned contractor, there are several important factors to keep in mind in order to ensure a successful and sustainable career. In this article, we will explore some of the key things to consider when working as a contractor, from managing your finances and navigating taxes to building a strong client base and protecting your legal rights.
Situations in which you may work as an independent contractor:
Organizations may choose to hire independent contractors instead of employees in situations where the work is irregular, transient, or one-time, and requires skills outside of the organization’s core business. However, as a self-employed contractor, you are not covered by the 2003 Holidays Act or the Employment Relations Act, which means that you will not be entitled to paid sick time, bereavement time, or annual time off. Additionally, you will not have the option to file a personal grievance if a dispute arises with the company you are doing business with (your client). Your working conditions will be governed by the contract (commonly called a “Contract for service”) between you and your client.
Health and Safety Requirements
As an independent contractor, you are responsible for complying with laws related to health and safety.
Additionally, companies that hire independent contractors, subcontractors, and employees are responsible for their health and safety, as well as that of customers and visitors to the worksite.
Your Service Agreement
Your service agreement with the company you work for should cover essential details, such as your work schedule, pay, and expenses. It should also address issues like dispute resolution, termination, intellectual property rights, non-compete clauses, and subcontracting.
Before signing the contract or agreement (also known as a “contract for service” or “service agreement”), it’s crucial to have a lawyer review it to ensure that it protects your interests. Remember to negotiate an hourly rate that accounts for expenses, including paid time off, as you are not entitled to such benefits as an independent contractor.
Insurance for contractors is an essential investment to ensure that you’re protected against any potential liabilities or losses that may occur on the job. As an independent contractor, you’re responsible for your own insurance coverage, which can include general liability, professional liability, workers’ compensation, and commercial auto insurance.
When working as an independent contractor, there are several factors to consider beyond just the job itself. One of the most critical aspects is understanding the terms of the contract or service agreement with the company you’ll be working for. You need to be clear on when and how you’ll be reimbursed for any expenses incurred while working, as well as how disputes will be settled and the ownership of any intellectual property produced during the project. It’s always wise to have a lawyer review the agreement before you sign it.
Additionally, as an independent contractor, you’re responsible for your own taxes and keeping meticulous records of your work-related expenses. You might also want to consider purchasing liability insurance to protect yourself from any potential damages or losses. Furthermore, it’s crucial to plan for periods when you may not have a contract, so setting aside funds for these times is advisable.
Other things to keep in mind include contributing to your own KiwiSaver, paying three distinct ACC taxes, and possibly joining a recruitment agency or professional organization in your industry. By taking all of these factors into consideration, you can set yourself up for success as an independent contractor.