3 contractor myths that need to be debunked

As tax and employment relations is complex, there are a number of myths that circulate throughout Australia's commercial world. Some of the most damaging are those that surround what defines a contractor.

If you are unsure about what makes a contractor a contractor, it is important to talk to professional accounting services. Nevertheless here are three myths debunked that will help you tell the difference between a contractor and an employee.

Myth 1 – Short-term work

For many businesses in Australia, there are times of high revenue as well as low periods. For instance, retail business tend to have revenue spikes in the holiday period.

In times like these, an owner may look to short-term workers to cover any extra work that is created by increased demand. While many people think that short-term work makes a person a contractor, employees can also enter into short, fixed-term contacts.

Additionally, casual employees tend to work irregular shifts but this does not make them contractors. 

Myth 2 – Invoices equal contractors

When business owners see an invoice, they instantly think that the worker is a contractor. However, this is not always true. Submitting an invoice for any work completed or being paid via invoice does not affect the legal status of an employee. 

What is important is the working arrangement, not whether or not they submit an invoice. 

Myth 3 – Having an ABN means they are a contractor

An Australian Business Number (ABN) is a 11 digit code that allows a business to be identified by the government. However, an ABN does not replace a tax file number but is used for other tax purposes. 

However, simply having an ABN does not make a worker a contractor. 

It is important that all business owners know how to identify a contractor based on their working relationship. Talk to the experts at WMC Accounting today to find out more.