Your Guide to Contracting
Getting paid, dealing with the tax, managing your obligations, and building a sustainable career.
Being an independent contractor gives you the freedom to work the jobs you enjoy, travel, set your hours around family commitments, take on more or less work, spread your risk, and get paid more for your time. It’s not surprising that thousands of New Zealanders choose to work as independent contractors.
If you’re new to contracting or if you want to set yourself up right, there are a few things you need to know to ensure you stay on the right side of the Tax Man and protect yourself from liability.
Make sure you qualify as a contractor…
What does being an independent contractor actually mean?
If you’re an independent contractor in New Zealand, then you:
- Are self-employed.
- Can make choices around the work you do.
- Are responsible for paying your own taxes.
There are lots of advantages to being a contractor – freedom, possibly being paid more, flexibility, etc. However, there are some aspects of contracting that you should be aware of before you dive in:
- You won’t get paid for gaps between contracts. You will have to find your own work or talk to Work and Income New Zealand about other options.
- You may find you move from job to job quickly and have to constantly adapt to a new environment and new people.
- You may get paid more than a salaried employee, but there are hidden costs you should be aware of. You have to pay your own taxes, insurance, ACC levies, KiwiSaver, and put money aside for holiday and sick leave.
- You are not protected by the Employment Relations Act, and need to have your own ‘Contract for Services’ with the company who hires you to protect your rights and outline your responsibilities.
Understand your contract terms
Your independent contractor agreement
As a contractor, you’re not protected by employment law and aren’t eligible for employee benefits like holiday pay or KiwiSaver contributions. In order to protect your rights and be clear about your responsibilities, you should make sure you have a written contract between yourself and the principal (the company/individual who’s contracting you). This is called an independent contractor agreement. Make sure your contract outlines:
- The work you’ll do, how much you’ll do, and how you’ll be paid for it.
- How long the contract will last – is it open ended, or does it expire on a certain date?
- The expenses and allowances you’re allowed to claim from the client.
- How disputes will be settled. (As a contractor, you can’t raise a personal grievance, so you’ll need an alternative disputes process).
- Your responsibilities around confidentiality, competing businesses, and client information. (For example, many contracts forbid you working for a competitor or contacting clients of the company after the contract period ends).
- A process for terminating the contract.
- If you’re required to take out any kind of insurance and what liabilities you assume.
- If any restrictions apply, such as the ability to subcontract out your work.
- Who will own any intellectual property developed as part of the contract.
For more information about independent contractor agreements, see the Business.govt website.
Your contracting questions, answered.
Here are the most common questions we receive about contacting.
How we can help
If all this sounds a little bit overwhelming – you’re not alone. We work with contractors across the country who trust us to manage their admin, so they can focus on what they do best.
At The Detail we take care of invoicing your clients, calculating and paying your GST, tax, ACC KiwiSaver and insurance. We are your support team!
We’ve streamlined and simplified the entire process of:
- signing of the contract with your client,
- completing timesheets,
- invoicing clients,
- calculating and paying tax, GST, ACC, KiwiSaver and insurance.
By the time we pay money into your account, you’re tax compliant and whatever funds you have are yours to spend.
Discover how The Detail can simplify you contracting business today!