A labour contractor is a self-employed individual who chooses the kind of work that he or she will do typically by offering their contract of services. Sometimes they also have the choice of where they’re going to work and how they’re going to do the work. The work is usually covered by a contract which spells out the terms and conditions. Sometimes though there’s no written contract. The parties would just have a verbal agreement about what’s expected to be completed and how much the contractor would be paid.

In New Zealand, this kind of work arrangement is often output-based. The contractor is expected to finish and complete an expected output or deliverable (EOD). This could be as small as a specific item or as huge as a completed construction project. Some contractors would do tasks that are supposed to be done by someone who receives a monthly salary from a full-time job. The big difference is that the contractor won’t be paid unless the output or work is completed.

Even though you don’t get paid regular monthly wages as a labour contractor, you’re still going to pay income taxes so it’s better to be familiar with filling out an R330C. Here are some things to keep in mind which might help you succeed as a labour contractor in New Zealand.

Set Up Your Craft

To succeed as a labour contractor in New Zealand, you have to make sure that you set up your craft right off the bat. It’s important to start right by getting your documents, tradecraft, and tools ready.

List down all the things and tools that you need to have. If you’re going to do some home building, you’re going to need power tools and construction equipment. If you’re going to do home cleaning or landscaping, you need to get your tools, implements, and supplies ready. You’ll need a truck if you’re going to take delivery jobs. If you’re a mobile app development contractor, you’ll also have to set up your workstation and other tools.

You also need to decide whether you’re going to be a sole proprietor or start a company. You’ll have to settle your taxes in different ways based on how you organize your business. Either way, you’ll have to register for the payment of Goods and Services Tax (GST) in New Zealand if you fall under a covered sector or industry.

Use Your Network To Find Work

When you start accepting labour contract jobs, you might find it hard for clients or projects to come by at first. But you shouldn’t lose heart right away. It just takes a bit of time for word about your trade or craft to go around. You can help word of mouth spread about your services by tapping your existing network of neighbours, friends, former workmates, and colleagues.

Another way to promote your services is to be more visible where it matters. Visit your friends and contacts more often or you can message them or give them a ring. Let them know that you’re taking in jobs and ask them to help get the word out about you and your business.

Build A Reputation For Excellent Work

While you’re still in the starting phase, it’s your resume of skills and friends’ recommendations that will help you land your first projects. But when you’ve already taken in a significant number of jobs and completed numerous projects, it’s the work that will speak for you. Your work will build a reputation for you, so make sure it speaks of a reputation for excellent work when people talk about the job you’ve done or the service you’ve rendered for them.

When you do a great job and your clients are happy, they’re more likely to speak well of you when their friends and contacts ask them about who did the project for them. That’s when you’ll start getting recommendations from previous clients and phone calls from prospective clients inquiring about your services.

Sort Out Your Pricing

When you’ve already done quite a number of outsourcing or subcontracting projects, you’ll have a better sense of how to estimate your costs and expenses for a project. Some set up their pricing systems at the onset but it could be difficult to rely on these estimates when you’re just using arbitrary figures plucked out from imaginary projects.

You’ll have a more grounded and realistic way of estimating project costs and expenses when you’ve already done a variety of small, mid-sized, and big projects. When you’ve reached that point, you’ll have a better understanding of how much materials and supplies cost. You also have more experience of how many materials and supplies you’ll need and use in an actual project.

Some experienced contractors would recommend this way of computing your service rates:

• Find out how much a specific job or contract would be paid per month if it was going to be done by a person who receives a monthly wage doing a full-time job
• From that figure, compute for the daily or hourly rate to do the job
• Add a premium of 20% to the daily or hourly rate. This multiplier represents the amount that an employer would usually pay-out for the taxes, retirement benefits, social security, healthcare benefits, and paid leaves of a full-time employee
• Use the final total figure as your daily or hourly rate when you quote your professional service fees for the job or contract.

Keep in mind that you still have to pay your income taxes, GST, and other expenses even though you’re a labour contractor and not a full-time employee. You might also want to consider setting aside some of your income for your retirement and healthcare expenses should you get sick on some days of the year. Some experienced contractors also suggest that you set aside at least three months’ worth of expenses as your savings. This will serve as your reserve or buffer funds during lean weeks or months when projects are hard to come by.

Conclusion

Being a labour contractor could be a very good work option for those who have the technical knowledge and specific skills. They can do work without having to stay under the employ of other companies or individuals. If you’re a labour contractor, the things mentioned above such as setting up your goals, building your reputation, and other tips can also help you become successful.