A no-fuss guide to starting a business (Part 4)

We previously took a quick look at the regulations and requirements for employing people. These days, however, many people are choosing to leave traditional employment and work as freelancers / independent contractors – but what does that mean for you as a business owner?

Freelancers are self-employed people who offer their services for a particular project or time period and they may have specific skills that your employees don’t have. Hiring freelancers can help you to increase your staff quickly for a short time and they leave afterwards so that you’re not paying extra salaries when there isn’t any work to be done.

Unlike casual, part-time or full-time employees, the Basic Conditions of Employment Act and the Labour Relations Act don’t apply to freelancers. They don’t qualify as ‘employees’ so they don’t get paid leave, qualify for company medical aid etc. They also need to take care of their own income tax. However, the new National Minimum Wage Act applies to both traditional employees and freelancers.

According to the Labour Relations Act, a person may claim to be an employee rather than an independent contractor if any of the following is taking place:

  • Their working is entirely directed or controlled by the employer
  • They are part of the business
  • They have worked for at least 40 hours per month during the last three months
  • They are economically dependent on the employer
  • The employer provided them with the tools of their trade
  • They only provide services to one person

Starting a Business series

Part 1: Some of the steps to complete in order to give your business the best start possible.

Part 2: Types of businesses, your legal and tax obligations, and how to register a company

Part 3: Looking at your obligations when your business grows and you need to hire employees.

Part 4: Employing freelancers – what does that mean for you as a business owner?

Part 5: Some of the fees and taxes you need to pay – PAYE and the Skills Development Levy.

Part 6: Your responsibilities as an employer in terms of UIF and the Compensation Fund.

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