Self-employed people

Minding your own business

Many of us dream of being our own boss, and with hard work and careful planning, self-employment can bring financial and lifestyle rewards - along with enormous personal satisfaction. But without the backup of a regular wage or salary, running your own show calls for careful money management.

Manage your cash flow

Many self-employed Australians earn a good living. But while your overall annual income may be strong, the flow of money is not always regular. It can be weeks and even months between pay cheques.
So it's very important to manage your money carefully. Running out of cash before you get paid again could mean living on credit cards, which charge high interest rates.

Pay yourself a wage

Rather than treating all the income you earn from your business as your personal spending money, pay yourself a weekly wage. You should also maintain separate bank accounts for business receipts and personal spending.

Deposit or transfer your business revenue into a high-interest savings account, and only draw on this account to pay yourself a set amount as a wage, or to pay actual business expenses. Putting your business earnings in a high interest account is a simple way of earning extra income through interest.
Set a personal budget to help you live within your wage, and so that you don't dip into business receipts too often. Use our budget planner to work out your wages and spending.

Plan ahead for holidays

As a self-employed worker you won't enjoy the benefit of paid holidays: it's up to you to set aside funds. Saving a little extra on a regular basis will help you manage through any quiet business periods, as well as funding a well-deserved break. 

Set aside money for tax

A common pitfall for small business is failing to set aside money for income tax. As you become more established the Australian Taxation Office (ATO) might also require you to make quarterly pay as you go (PAYG) tax instalments. If you don't meet your tax obligations each year, you could pay hefty penalties. Talk to your accountant and read ATO: Key lodgement dates for business. At worst, the ATO can take legal action, including winding up your company or bankrupting you to recover unpaid taxes.
Unless you plan ahead for tax, it can be difficult to pay tax bills when they fall due. So it's worth making this a priority for your business.
Use our savings goals calculator to work out how to set aside money for your upcoming bills.

Divide your cash takings

Keep on top of your tax obligations by opening a separate savings account and regularly deposit part of your takings into this account. It can take discipline not to dip into the account, but a good incentive to leave the money aside until you need to pay tax is to remember that the ATO can charge high penalties for late tax payments.

Don't forget GST

If your business is registered for Goods and Services Tax (GST), you will also need to set aside money for that. 

Don't neglect retirement savings

Self-employed people often earn a decent income while working, but without the benefit of employer-paid superannuation contributions, find they have very little money to live on in retirement. Almost a quarter of self-employed Australians had no superannuation at all in 2012, according to research by the Australian Super Funds Association (ASFA).
Don't rely on selling your business to fund your retirement. Without your involvement, your business may be worth less than you think. Many business ventures can also be hard to sell. Instead, think about building a separate pool of retirement savings. You may also be eligible for the government super co-contribution. For more information see super for self-employed people.

Save for retirement, save on tax

Superannuation is a tax-effective investment for retirement savings. Adding to your super can also reduce the tax on your current income.
As a guide, you or your business may be able to claim a tax deduction of up to $30,000 annually for contributions to your superannuation fund (or $35,000 annually if you are aged 50 or over). It's an easy way to trim your tax today while building a nest egg for the future.
Be sure to make your contributions before 30 June to claim them as tax deductions, but be careful not to go over the contribution caps so that the penalty tax does not apply. 

Protect your income

One hazard of running your own business is being unable to work due to illness or injury. Without sick leave, your financial situation could take a turn for the worse if you become sick or injured.
Income protection insurance protects you financially if you can't work because of illness or injury. It's worth thinking about when you run your own show because bills don't stop if you're unable to work.
Premiums for income protection insurance are usually tax-deductible, which helps reduce the cost. Most large insurance companies offer income protection insurance, or you might be able to buy it through your superannuation fund. Do an internet search to compare different income protection insurance products and prices.

Keep control your cash, and draw a line between your personal and business' money, to help you make the most of self-employment.

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Personal Protective Equipment (PPE)

What is personal protective equipment?

Personal protective equipment (PPE) is anything used or worn by a person to minimise risk to the person’s health or safety and includes a wide range of clothing and safety equipment. PPE includes boots, face masks, hard hats, ear plugs, respirators, gloves, safety harnesses, high visibility clothing etc.

What standard of Personal Protective Equipment is required?

The standard of personal protective equipment used at a workplace must be:

• selected to minimise risk to health and safety
• suitable for the nature of the work and any hazard associated with the work
• a suitable size and fit and reasonably comfortable for the person wearing it
• maintained, repaired or replaced so it continues to minimise the worker’s health and safety risk, and
• used or worn by the worker, so far as is reasonably practicable.

What is the worker’s duty in relation to personal protective equipment?

A worker who is provided with personal protective equipment (PPE) by their person conducting a business or undertaking (PCBU) must:

• use or wear the PPE in accordance with any information, training or reasonable instruction provided by the PCBU, so far as they are reasonably able
• not intentionally misuse or damage the PPE
• advise the PCBU of any damage, defect or need to clean or decontaminate any of the PPE they are aware of, and
• consult with their manager if the PPE is uncomfortable or does not fit properly.

If a worker refuses to wear or use the PPE, the PCBU can take action against the worker. A worker who does not wear or use PPE, or intentionally misuses or damages it, may also face prosecution.


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The Difference between a JSA and SWMS

We recently received an enquiry about the difference between a job safety analysis (JSA) and a safe work method statement (SWMS).

The term JSA has been in common usage in Australian industry for decades. A JSA is a form of risk assessment, which details step by step how the task is to be carried out safely, as opposed to many risk assessments which only consider static conditions such as a machine or chemical storage risk assessment.

In recent years some companies have expanded this term to “JSEA” to include environmental aspects as well. However, it is not necessary to keep changing the titles as a JSA can and usually does specify every aspect of the task including; safety, quality, energy efficiency, environmental aspects, cost effectiveness and quickest and easiest way to perform the task.

There are only three (3) main components for a JSA, and these include:

• Basic Steps (stages of the task eg start machine, load machine, clear blockage, unload etc)
• Hazards (for each step)
• Procedure (step-by-step instruction on how to safely carry out the task including equipment required, PPE to be worn and any special precautions).

So what is a SWMS?

The term SWMS gained common usage in Victoria following the introduction of the OHS Regulations 2007. A safe work method statement (SWMS) is prescribed for all “high risk construction work” per Reg. 5.1.9.

The regulations do not prescribe the format or details of a SWMS, other than in Reg. 5.1.5, which requires the SWMS to:

1. Identify work that is high risk construction work; and
2. State the hazards and risks to health or safety of that work; and
3. Sufficiently describe measures to control those risks; and
4. Describe the manner in which the risk control measures are to be implemented.

A guidance form on the Victorian WorkSafe website for a SWMS includes the same three components as for a JSA e.g. tasks or stages, hazards and control measures.

The usage of the term SWMS has increasingly been applied outside of high risk construction work and this is where some confusion has arisen.


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Staying Safe at Work

Workplace accidents and injuries can be avoided if appropriate care is taken by both the worker and the employers. Workers have a responsibility to take reasonable care of their own health and safety.

The following are some tips to help workers stay safe at work:

• Pay attention to any training you receive, including your workplace induction training.
• Know the health and safety procedures in your workplace, including emergency procedures.
• Always follow the health and safety procedures in your workplace.
• Ask for training when you are doing a new task or using/operating new tools or machinery.
• Asked to be supervised to make sure you are doing to the job correctly.
• Talk to your supervisor if you think a task is too dangerous or difficult for you.
• Always wear any personal protective equipment supplied by your employer.
• Report all hazards, near misses and injuries (no matter how minor) to your supervisor.
• If you can’t remember how to do a job safety, ask your supervisor or workmate to help you.
• Keep an eye out and help new or young workers.
• If you have a safety concern, talk with more experienced workers such as your supervisor or workmates.

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Who are PCBUs, Officers, Workers and Others under the WHS Act and what are their duties?

The WHS Act places duties on those persons, who by their acts or omissions from or associated with work being undertaken, affect health and safety.

The duty holders are:

· PCBUs
· Officers
· Workers and other persons at the workplace

 A person in control of a business or undertaking - PCBU

A PCBU is the legal entity operating a business or undertaking. A PCBU may be an individual person or an organisation conducting a business or undertaking.

Examples of PCBUs that are organisations include:

• public companies
• private companies
• trustees that are companies
• cooperatives that are companies
• government departments and authorities
• incorporated associations if they employ someone
• local authorities (municipal corporations or councils)
• schools

It is not an individual, unless they are conducting the business in their own name as a sole trader or partner.

Examples of PCBUs who are individuals include:

• partners in partnerships 
• sole traders and the self employed
• individual trustees of trusts (as with some family businesses)
• committee members of unincorporated associations if they employ someone.

The person conducting the business or undertaking is also a worker if they carry out work in the business or undertaking.
However the WHS Act makes it clear that an individual is not a PCBU if they are involved in the business or undertaking only as a worker or officer of the business or undertaking.  Individuals who are directors or in managerial positions within employing organisations have separate and specific duties as officers.

What must the PCBU do ?

A PCBU must ensure, so far as is reasonably practicable, that the health and safety of workers and other persons is not put at risk from work carried out as part of the conduct of the business or undertaking.
A PCBU will be liable if they expose a person to risk to their health and safety and the risk arose from work carried out as part of the conduct of the business or undertaking.
For PCBUs, their duties are qualified by what is “reasonably practicable” in ensuring health and safety.

Additional duties for specific PCBU activities

The WHS Act also places additional duties on PCBUs who carry out specific activities associated with work or workplaces:

• Persons with management or control of a workplace,
• Designers, manufacturers, installers, constructors, importers and suppliers of plant, structures or substances.

Persons in control of workplaces, designers, manufacturers, installers, constructors, importers and suppliers of plant, structures or substances have a responsibility, so far as is reasonably practicable, to ensure these are without risks to health and safety of workers and people who are at or near the workplace.
The duties are specified for each category. They involve ensuring safety throughout the life cycle of the product for those exposed to or affected by its use at or in the vicinity of the workplace.
The duties require examination, analysis and testing and the provision of information to ensure that the plant, substance or structure does not have health and safety risks.

What is a business or undertaking?

The WHS does not define “business” or “undertaking”. However these are broadly explained in guidance material as:
Business = commercial, for profit
Undertaking = usually not profit making or commercial. Can include households and voluntary organisations
Private or domestic activities are not explicitly excluded by the WHS Act or its regulations.

PCBU duties involve work

The duties of a PCBU are involved with carrying out work.
The PCBU will have a health and safety duty if it arranges for work to be done, directs or influences it, or contributes something for the work to be done.
Work is not defined in the WHS Act.
In contrast the now replaced NSW OHS Act 2000 defined work as meaning  “work as an employee or self employed person.”
Further the NSW OHS Act defined “at work” as when the employee is at the employer’s place of work and not otherwise.

WHS Act definition of workplace:

Workplace is a place where work is carried out for a business or undertaking and includes any place where a worker goes or is likely to be while at work.

In summary:

A health and safety duty is owed by a PCBU if it:

• engages workers or causes workers to be engaged
• influences or directs workers activities
• has the management or control of the workplace in which work is done
• designs, manufactures, imports, supplies, installs, commissions or constructs plant or structures or substances for use at a workplace.

Who is not a PCBU?

The WHS Act specifies who is not a PCBU. These are:

1   Volunteer associations which have no workers

A “volunteer association” which does not employ any workers is not a PCBU.
“Volunteer association” means a group of volunteers working together for one or more community purposes where none of the volunteers, whether alone or jointly with any other volunteers, employs any person to carry out work for the volunteer association.
If the association employs someone, or causes someone to be employed, they become a PCBU.

2   Elected members of local authorities

An elected member of a local authority does not in that capacity conduct a business or undertaking.

3   Strata bodies unless they engage workers

The WHS Act allows further exclusions to be made by regulation.  At this stage, the WHS Regulations exclude ‘strata title bodies corporate that are responsible for common areas used only for residential purposes’, unless the strata title body corporate engages one or more workers as an employee.

Private and domestic work 

Work for private or domestic purposes is not explicitly excluded by the WHS Act or regulations.
However guidance material provided by the regulators says that the intent of the legislation is that the following kinds of persons should not to be taken to be PCBUs:

• Individuals who carry out domestic work in and around their own home (e.g. domestic chores etc).
• Individual householders who organise one-off events such as dinner parties, garage sales, lemonade stalls etc.
• Individual householders who engage persons to carry out ad hoc home maintenance and repairs or other domestic work, e.g. casual babysitters; tradespeople to undertake repairs. It is important to note that a tradesperson will either be a worker for a business or undertaking, or a business or undertaking in their own right if the tradesperson is self-employed.

If a person is engaged in work on a routine or ongoing basis for domestic purposes, then the householder who has engaged them could be categorised as a PCBU with all the associated duties.  

Officers

The duty of care placed on officers is that of “due diligence” An officer is personally liable to undertake due diligence. The duty is proactive.

Who is an officer?

• Directors, company secretary, partner, officeholder
• Those involved in making decisions that affect the whole or a substantial part of the business or undertaking
• Those with capacity to affect significantly the organisation’s financial standing
• Those on whose instructions or wishes directors are accustomed to act
• Receivers, administrators, liquidators

Workers and other persons

The duty of care for workers and others is that of “reasonable care”.
While at work, workers are required to take reasonable care for their own safety and that of others who may be affected by their actions or omissions. They must also cooperate with any actions taken by their PCBU to comply with the WHS Act and Regulations.

Who is a worker?

Workers include:
· an employee
· a contractor or subcontractor
· an employee of a contractor or subcontractor
· an employee of a labour hire company who has been assigned to work in the person's business or undertaking
· an outworker
· an apprentice or trainee
· a student gaining work experience
· a volunteer
This definition is wider than the definition of “employee” in the NSW OHS Act 2000. However because of the deeming of worker provisions in the NSW OHS Act 2000 and court interpretation, the WHS Act definition is similar to current scope of coverage under the NSW OHS Act 2000.
However the duties of PCBUs to workers are different under the WHS Act because of

• new duty holder categories of  PCBUs
• the new consultation requirements
• the expanded rights of workers.

Other persons

Duties of other persons at the workplace
A person at a workplace must:

• take reasonable care for his or her own health and safety
• take reasonable care that his or her acts or omissions do not
  adversely affect the health and safety of other persons
• comply, so far as the person is reasonably able, with any
  reasonable instruction that is given by the PCBU in order to comply with the  WHS Act.

Do volunteers have a duty under the WHS Act?

Yes. The definition of a 'worker' includes a volunteer. Therefore, volunteer workers have the duty of workers under the new laws, for example, to take reasonable care for their own health and safety and comply with reasonable health and safety instructions.
The PCBU has the same duty for volunteers as any other worker, including consultation arrangements. 


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The Workforce is Changing rapidly - How Will You Manage?

Very interesting.....what will it be like in 2030 in the work place?

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