Contracting Pros and Cons

Posted on February 2014 By Speller International


To some, contracting is a holy path towards greater financial return from and control over one’s time. Whilst to others, it is a means to an end whilst seeking a greater sense of security that comes with a permanent position.

Which side of the fence do you sit on? Have you considered this question from all perspectives and could you be missing some vital pieces of information?

Read on just to be sure…



Contracting can provide greater choice over where, when and under which conditions you work. Agreements are typically based on working practices, conditions, deliverables and working hours/days. It can also provide greater scope for testing the waters in other industry sectors and to broaden your experience.

Variety is the Spice of Life

Over time contractors typically enjoy more varied experiences as they engage with different organisations, and work across diverse workplaces and locations. And of course, organisations are your client, not your employer, which can often to a more balanced and fair relationship.

Boosting Skills

Variety leads to experience and experience leads to better skills. This can be a powerful recipe for getting an edge as an SAP consultant and building a persuasive CV. Meanwhile your network grows; a substantial by-product with a range of benefits.

Greater Financial Reward

Did we say double your money? OK, maybe not all the time but typically the hourly rates enjoyed by contractors are much higher and occasionally up to twice as much.

It all boils down to the fact that contractors do take on the riskier side of the relationship, as engagements are typically flexible and short term.

PAYG vs. PTY vs. Contractor Management

How to legally engage with your client (employer) as a contractor is the biggest question you’ll face and one you need to consider carefully. We strongly advise you seek professional advice from your accountant when facing this question. For now, here are some key points to consider:

Contract as a Speller International PAYG Contractor

This is arguably the simplest way to contract as we (Speller International) handle the majority of your administration, removing any hassle for you:

 As a Speller International PAYG Contractor we will:

  • Process your pay 3 weeks in arrears 

  • Email your pay advice

  • Lodge your PAYG tax to the ATO weekly

  • Make quarterly superannuation contributions to your nominated fund

  • Coordinate salary sacrificing of superannuation

  • Issue your annual PAYG statement in July

  • Supply you WorkCover

  • Administer $20m of Professional Indemnity and $20m of Public Liability Insurance

Contract as a Pty Ltd Company

When you operate as a Pty Ltd company, you assume the flexibility and control of running your own business as well as the burden of managing its affairs. The biggest difference lies in the opportunities you may get to offset expenses and minimise tax.

Here’s a shortlist of things you’ll need to address:

  • Work with your accountant to set up the company

  • Register for GST (if applicable)

  • Procure and administer Workcover

  • Acquire Professional Indemnity and Public Liability insurances

  • Administer your own Superannuation

  • Complete BAS/IAS statements as required

  • Prepare statutory accounts and pay for associated costs

Note: this is not a complete list and you must seek advice from your accountant.

Contract through a Contractor Management Company

Contracting through a Contractor Management Company provides the same financial benefits of Pty Ltd contracting, without all the associated risks and time spent administering a company. For a nominal fee a Contractor Management Company will:

  • Provide you with a company tax structure to work under

  • Act as your own tax expert

  • Take care of all administration and back office support on your behalf

  • Maximise your tax position

  • Cover you for Workers Compensation, Public Liability and Professional Indemnity insurances

Note: different contractor management companies can offer different services so it’s a good idea to research and compare before you commit.



As a contractor, even if you reduce your burden by engaging through an agency like Speller International or a Contractor Management Company, you need to allow for a little more administration time. At the very minimum you will need time for things like filling in timesheets and submitting expenses.

If of course you decide to handle your own affairs entirely then you need to factor in time for invoicing and preparing your submissions to the ATO, which can be quite time consuming. Please refer to the ATO website for more information on the requirements for tax lodgements and declarations.

Less Income Security

As a contractor you will usually spend more time seeking and retaining “employment”. Obviously, whilst between contracts you will not be earning any income. For some people this is seen as a risk, whilst for others it is seen as an opportunity to get downtime or invest in their training and certifications.

Bye Bye Employee Benefits

As a contractor you exchange your time – and value you provide – for dollars, and that’s about it.

Traditional employees of course receive a range of benefits including sick and holiday pay, and long service leave.

This doesn’t mean that you can never get sick or take a holiday; it just means that financially you need to prepare for a few ‘rainy days’, and plan better for a few more ‘sunny days’ off.

Powers of Negotiation

More so than an employee, you need to be adept at negotiating your own payment terms and working conditions in order to maximise your potential. This of course doesn’t always come naturally. This is one of the advantages of utilising a specialist SAP recruitment agency like Speller International as we work hard to represent you and ensure you are working under the best conditions.

Not Having Traditional Colleagues

Sometimes, it can be a little bit isolating as a contractor. As your passage through workplaces is more fleeting your relationships might not be as strong as those enjoyed by the ‘employees’ you work with.

There is also the matter of managing your affairs which can be difficult and time consuming; it’s especially important to build a good support network of experts around you who can help you along the way.

We hope you’ve found this article useful. If you still have questions we’d be happy to take them in our comments section below. Also, stay tuned to our blog, as we will be providing more information on this topic over the next weeks and months.