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Understand the difference between employees and contractors
by Intuit• Updated 7 months ago
Learn the basics about classifying a new worker as an employee or a contractor.
Deciding if you can hire someone as an employee or contractor is a big decision. It impacts taxes, what you need to do for payroll, and more. The government has a lot of rules around this, but here is a basic overview and some links that may help you.
Employee vs contractor
An employee is a person hired by the employer. The employer generally has more control over an employee. A contractor is a self-employed person who provides services to businesses, generally on their own terms.
Use the ATO's guidelines to determine your worker classification.
If your worker is an employee, you must:
- Withhold payroll taxes (PAYG withholding).
- Pay super (for eligible employees).
- Withhold Medicare levy.
- Report and pay fringe benefits tax (FBT) (for eligible employees).
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