How Can The Detail Help You?

As a recruiter, your job is to act as the go-between for contractors and business owners and make sure the whole process runs smoothly.

Let us take care of the details!

A huge part of your job is making thing easier for both sides. The contractors on your books often don’t understand how to invoice, pay their taxes, register for GST, and/or fill out their timesheets. Business owners often need to know how to effectively manage their payroll to include contractors without creating an admin nightmare.

Partnering with the Detail you have the opportunity to add value to your clients by making it easy for both contractors and businesses to manage their admin and compliance obligations to stay on the right side of the IRD.

The Detail can solve both these issues. Here’s how…

Offering payroll services

A situation you’ll see come up time and time again is companies who decide to use contractors to reduce their employment risk. These companies often prefer to outsource the payment of their contractors to recruitment agencies like yours. Recruitment companies often charge a fee of 7%-12% of the contractor’s fees to the business to manage this process. The problem here is that this can create a conflict of interest. What this means is that a recruitment company gains access to personal details of contractors and they can then try and offer those contractors other jobs. Also, many contractors aren’t sure how to invoice or fill out timesheets or do their taxes. When they ask recruitment companies for help, they’re often left in the dark.

Get it right first time...

How we can help

We can run the onboarding and payroll services between contractor and business. This removes the conflict of interest and also creates a streamlined process for both sides to get their admin sorted and invoices paid faster.

We’re great for contractors because we:

  • Explain how to do the payroll process and onboard contractors properly.
  • Look at their tax position and ensure they are in the correct structure.
  • Make sure that they are GST registered if they need to be.
  • Give some suggestions/advice as to what they could be claiming for expenses.
  • Provide great insurance options.
  • Can help sort out problems for contractors when the payroll process goes wrong.

We’re great for employers because we will:

  • Manage the on-boarding process for each contractor.
  • Send a single, GST inclusive tax invoice for all of contractors’ hours.
  • Require just one payment to cover all contractors.
  • Process contractors’ tax, ACC and KiwiSaver deductions, including overseas payments to local staff.
  • Charge less for more value.
  • Eliminate any potential conflict of interest.

We’re great for YOU because we:

  • Enable you to offer a streamlined service that solves problems for both contractors and business owners.
  • Create a USP for your business that sets you apart from other recruiters.
  • Eliminate potential conflicts of interest.
  • Charge 5% fee for our services, enabling you to add your percentage on top without any additional work.
  • Take care of support and troubleshooting to free up your time for revenue generation.

Want to know more? Talk to The Detail today.

What a first-time contractor needs to know about tax, compliance and administration.

How does it all work?

Independent contractors tax obligations 101…

As an independent contractor in New Zealand, the workforce

  • Are self-employed.
  • Can make choices around the work they do.
  • Are responsible for paying their 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 your clients should be aware of, such as the fact they don’t get paid for gaps between contracts, annual leave, sick leave, or public holidays (unless they work as well). Many contractors (especially those just starting out) aren’t familiar with the rules and regulations. The more you can help them understand their rights and responsibilities, the easier the recruiting process will become.

We'll make sure to dot the I's and cross the T's...

Independent contractor agreement

This protects the rights of both parties and makes clear responsibilities. Many recruiters offer template contracts for business owners and contractors – if you do this, make sure your contract has been drawn up by a qualified lawyer. The contract should contain:

  • The work that will be done, how much of it, and how the contractor will 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 the contractor is allowed to claim from the client.
  • How disputes will be settled. (Contractors can’t raise a personal grievance, so they need an alternative dispute process).
  • The contractor’s responsibilities around confidentiality, competing businesses, and client information. (For example, many contracts forbid working for a competitor or contacting clients of the company after the contract period ends).
  • A process for terminating the contract.
  • If the contractor is required to take out any kind of insurance and what liabilities they assume.
  • If any restrictions apply, such as the ability to subcontract out 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.

Key Contracting questions, answered

Helping your contractors understand how the business works will make the process smoother for everyone involved. Here are the most common questions you may receive about contracting, and their answers.

Do I get paid for time off and sick leave?

You won’t get paid unless you’re working. You’ll need to budget throughout the year to make sure you have enough money set aside to cover time off and sick leave.

What about public holidays?

As a contractor, you don’t get paid for public holidays unless you work on those days. Many salaried employees are paid extra to work on public holidays, but you wouldn’t usually be entitled to this.

How do I get paid?

Instead of getting a regular paycheck automatically deposited into your account, you’ll need to invoice your clients for the work you do and any expenses you incurred. You won’t get paid until you send out the invoice, so it’s important to keep accurate records and stay on top of sending your invoices.

If you’re terrible with the money side of things, consider using The Detail to manage your finances, send out your invoices, pay your tax, and sort all your business administration. Find out more.

Do I need an accountant to do my return?

There’s no legal requirement for you to use an accountant, and the IRD has useful online guides to help you complete your own tax return.

However, a simple mistake could cost you hundreds or thousands of dollars at tax time. If you don’t have a head for numbers, consider paying an accountant or looking at The Detail’s support services – an inexpensive option to manage your business administration, invoicing, tax, GST, ACC, Kiwisaver, and insurance. Find out more.

What ACC do I need to pay?

ACC levies cover injuries that happen at work. Salaried employees have their levies automatically deducted along with their PAYE. As a contractor, you are a business owner (your business being yourself) and as such, you have to pay these levies.

When you file your tax return with the IRD, you choose a Business Industry Classification for yourself. Using this BIC code, ACC determines the risk of injury in your industry and adjusts your levy accordingly. For example, a forestry worker is more at risk of injury than a freelance writer, so their levy is higher.

For more information, see the ACC website.

What Insurance do I need?

You put yourself at risk if you don’t have the correct insurance in place. In some industries, you’re required to have certain types of insurance before you can land a contract. Professional Indemnity and Public Liability insurance is usually a prerequisite contractual requirement, driven by the client.

Here are some other common types of insurance contractors take out:

  • Liability insurance. This insurance covers you if someone sues you or the company you work for, or if you accidentally break the law, give bad advice, or make a mistake. If you’re an advisor (for example, a consultant or financial advisor) or if you have the potential to damage another person’s property (a plumber or builder) or reputation (freelance journalist) it’s a good idea to look into liability insurance.
  • Income protection. If you don’t get work for several months, income protection pays you a percentage of your typical monthly earnings. This enables you to keep up with your living expenses. Many mortgage providers require income protection insurance.
  • Asset insurance. This protects tools and other assets you use in your business from theft and damage.
  • Commercial vehicle insurance. If you drive a vehicle as part of your contracting, then you’ll need vehicle insurance.

There are many factors to consider when choosing insurance. At The Detail we have negotiated a great group rate for professional contractors. You can pay as you earn through our Contractor Support Service. If you want someone else to organise your insurance for you and find the best deal, get in touch with us today.

Do I need to pay GST?

If your gross (before tax) income is higher than $60,000 over twelve months, then you will need to register for and pay GST (Goods and Services Tax). But you can also claim back GST on some of your expenses.

Some income, such as royalties and overseas contracts, are zero-rated, so you won’t pay GST on these. It’s important to understand how GST works and what is and isn’t eligible. Learn more about GST on the IRD website, and talk to the team at The Detail today and let us sort out your GST woes.

What if I’m on a work visa?

If you have a work visa with open working conditions, then you’re allowed to be self-employed. Check the conditions on your visa, as it will outline the types of work you can do.

For more on self-employment and visas, see the Immigration NZ website. For immigration advice, free resources and help with your visa applications we recommend you check out the website of leading immigration law firm NZIL.

Who pays my Kiwisaver if I’m a contractor?

You do. While salaried workers have their Kiwisaver set up to automatically deduct 3%, 4%, or 8% from their salary each pay period, you are responsible for paying your own contributions directly to your Kiwisaver provider. Many contractors use an automatic payment to ensure they remember to pay into their Kiwisaver every month.

As a self-employed person, you’re eligible to receive the $1,000 initial Crown contribution and – provided you contribute a minimum of $1,042.86 per annum, a Member Tax Credit of $521.43 per year.

However, you won’t be eligible for any employer contributions. For more information, see the Kiwisaver website or talk to your provider.

What if I need gear to do my job?

Unless specified in your contact with the company hiring you, you’re responsible for providing your own tools/gear to complete the job. However, any gear purchased for the purpose of doing your job can be deducted as an expense on your tax return. This includes:

(Items under $400 are deducted as expenses. Anything over $400 is considered a capital purchase and has to be depreciated. For more information on what expenses you can claim, see the IRD website.

What expenses can I claim?

The Inland Revenue Department allows you to claim a number of expenses against your income in order to reduce the amount of tax you have to pay. Common expenses include:

  • Home office expenses like a computer, stationery, as well as a portion of your home’s phone, power, internet, rates, mortgage interest, or rent.
  • Tools, such as hammers, nails, power tools, rollers, etc.
  • Legal fees, for example from drawing up contracts, up to $10,000 per year.
  • Magazine subscriptions and newsletters that enable you to keep up with your industry.
  • Mileage if you need to drive to reach sites or client meetings.
  • Workshops, courses, and events for professional development.
  • Contractors and subcontractors, including your accountant, bookkeeper, or editor.

For more information on what expenses you can claim, see the IRD website.