Cleaning shopping center

Objectives: 

Sam, operates a cleaning company servicing several shopping centre clients. As the cleaning industry has very low margins, Sam is looking to reduce his cost of doing business to remain competitive. 
  
Facts:

  • $2 million revenue.
  • Employs 25 individual subcontractors at an annual cost of $1.3 million.    

Accountant’s Advice: 

Tax Strategy 101: Reducing Super Guarantee Payments – This involves changing all the individual subcontractors to contractors operating through an entity (a partnership, company or trust). In addition, each contractor should be operating as an independent contractor under a written, signed, independent contractor agreement (which has been prepared by a solicitor).

Results:

This eliminates the 9.5% super guarantee liability on $1.3 million subcontractor payments, saving $123,500 pa.