So you want to be your own boss, choose your projects and maybe take a long holiday between contracts. 🏖️ Great. First, you need to decide how you will be paid.
Option 1: PAYG through an agency
The agency pays you as a temporary employee, withholds tax and pays super.
- Pros: simplest option, no company to run, super handled for you
- Cons: fewer deductions and less flexibility
- Best for: first-time contractors and shorter contracts
Option 2: ABN as a sole trader
You invoice under your own ABN and manage your own tax and super.
- Pros: more control, easy to set up
- Cons: you handle GST, tax instalments and super yourself, and personal services income (PSI) rules may limit deductions
Option 3: Your own Pty Ltd company
You contract through your own company, which pays you.
- Pros: professional structure, potential tax planning benefits, limited liability
- Cons: setup and accounting costs, more admin, and PSI rules still apply in many cases
- Best for: experienced contractors with steady work
Insurance to think about
- Professional indemnity
- Public liability
- Income protection (very easy to forget, very painful to need)
Practical tips
- Build a buffer of three to six months of expenses for gaps between contracts
- Talk to an accountant before choosing a structure
- Keep your skills current, because your next contract depends on it
- Understand the agency margin, fixed daily margins are often fairer than percentages
This is general information only, not tax or legal advice. Speak to a qualified accountant about your situation.
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