Jeremy Tauri: Contracts offer a practical solution

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What do you do if your business needs to get something done but you don't have the resources to do it?

Maybe you need some help with marketing but don't have anyone on staff with those responsibilities.

Maybe you're expecting a lot more orders over a short period of time - not long enough to hire another employee but too long for your existing staff to cover.

What you might decide to do is contract the work.

Requests for proposals and offer of contracts for services are not limited to large businesses or organisations prepared to take on large-scale projects.

Contracts between small businesses or small businesses and the self-employed to outsource what were in effect employee positions are becoming popular as a way of coping with growth and increasing demand.

It has been predicted that in 10 years more New Zealanders will be working on contract or in temporary positions than those employed in the traditional sense as we now know it.

Cloud technology and the fibre roll-out continue to play a part in the integration of back-end services on contract for small businesses.

Businesses can now easily pick up help with day-to-day tasks because technology means that people based in other offices in the city or around the world, can easily collaborate with them. Services businesses are outsourcing range from debt collection, reception services to marketing.

We're seeing the white collar being systemised and replaced by hardware and software in the latest technological leaps.

For those seeking people to jump on the tools, contracting is a viable way to replace a 0.25 or 0.5 FTE where you cannot offer a full-time position or find the immediate employee you're looking for.

And if you're wondering how remuneration for contractors is calculated, you'll find the hourly rate is fast becoming a thing of the past.

Piece rates, contract share or other methods are becoming common in contracts.

This helps to guarantee and fix costs, while strict terms and conditions in the contract help to guarantee quality and work for the future.

Contractors contribute their own gear, pay for their own insurance and ACC so although the cost may seem higher the quick add-on of a contractor means you may not need to invest in assets or training to do the job.

In effect, it could actually be saving you money and time than it would to hire an employee as the additional costs to an hourly rate on stats, holiday pay, KiwiSaver, ACC and training alone can be 25 to 30 per cent, not to mention the time to manage them. Contractors will like to have their autonomy.

Make sure the agreement you have is clear and meets the criteria to qualify as a contractor.

• Jeremy Tauri is an associate at Plus Chartered Accountants.