How to pay sole traders in Australia
If you’re searching for highly talented, well-educated, English speaking professionals that you can hire from remote, Australia is a great place to start. Sole traders throughout Australia can offer skills in a variety of fields, from design and writing, to video production and data science.
More and more businesses are choosing to outsource some of their most important daily tasks to sole traders in Australia. But before you dive in, it’s wise to consider the best methods for paying those workers so that everyone is happy in the end. In this guide, we cover:
How to pay an international invoice
1. Negotiate currency exchange rates
Talk to your remote employees to find out if they would be willing to accept payment in your domestic currency. For example, if you’re a business in the United States and you need to pay a company in China, you may find that many businesses are happy to be paid in dollars.
2. Find a money transfer provider that works for you
Paying for an international invoice to a contractor in Japan doesn’t have to be complicated or expensive. With the right provider, you can transfer your money easily online, and at a better rate. We’ll compare two popular options for making an international money transfer later in this article.
3. Mitigate your currency risk
Currency risk is the risk that a business or individual’s financial performance or position will be impacted by fluctuations in the exchange rate. Depending on the provider you choose, you can access tools to help mitigate risk like forward contracts to protect against any unfavourable currency movements. This will help with offering consistent pricing if you need to pay sole traders in Australia regularly.
How to transfer money to sole traders in Australia
Once you’ve found the perfect sole traders from Australia with whom you’d like to work, it’s time to think about how you’ll go about paying them. Sending your money abroad could end up costing you more than you might expect, but if you implement the right strategy, you could end up saving money instead.
Two of the most common ways to pay international invoices and send money to Australia are by using a bank or a money transfer service. We break down the benefits and drawbacks below so you can make the wisest decision for your business.
Banks are a common option for making an international money transfer because it feels convenient to use the same provider you’re probably using for a lot of your other transactions. If you’re thinking about turning to a bank to submit payments to your sole trader in Australia, however, it could end up costing you, and your sole trader, more money than it’s worth.
Banks typically charge high margins and fees, including a margin on the interbank exchange rate that could be upwards of 5%, whenever you ask them to move money internationally. Your sole trader might end up receiving far less money than you originally agreed to pay, and that may cause them to seek other clients, or they might ask you to cover the cost of all of those fees.
Online money transfer services
International Money Transfer (IMT) providers are typically specialist online money transfer companies. With an online money transfer provider like OFX, you can start making smarter international transfers that help you pay your sole trader fairly, while also keeping more money in your own bank account.
Sending money to Australia is a snap with OFX, as transfers are swift and secure, and you can do it all 24/7 from our easy-to-use mobile app. But, in addition to convenience and speed, OFX also charges lower margins and fees than banks charge, so you’ll save money, and you can rest assured that your sole trader will be happy as well.
Also, just because you’re transferring money online doesn’t mean you can’t enjoy the perks of human support when you need it. OFX customer service is always there to answer questions and address concerns (unlike banks, which are only open during specific hours).
|Fixed fees||Exchange rates margins||Support|
|OFX||Low to no fixed fees, depending on where you’re sending from.||A small margin that’s typically lower than the banks’ margins.||Available 24/7 over the phone to provide helpful human support for all currency-related enquiries.|
|Standard bank||Hefty fixed fees, sometimes around $30, just to make a transfer.||Many banks can charge up to a 5% margin on the interbank rate, depending on how much you’re transferring.||Banks operate within certain hours of the day, so you can’t always get the support you may need.|
What your business should look for in a global money transfer provider
Now that you know it’s better to send money abroad with a money transfer service, it’s time to consider what you should look for as you decide between the different providers that are available.
You and your sole trader want your payment to get to its destination quickly, so speed is definitely something to think about. With OFX, most transfers take a mere 1 to 2 days.* And because we’re available 24/7, you can transfer whenever you need – and get help if you get stuck trying to send a payment in the middle of the night.
You already know that banks charge high margins and fees, but money transfer providers might not be much better, unless you choose the right one. At OFX, we charge margins and fees that are lower than the rates charged by banks, so you can immediately start saving money in the margin alone. On top of that, you can use currency management tools, like forward exchange contracts and limit orders, to save even more money.
OFX’s Forward Exchange Contract, for example, gives you the chance to lock in a great exchange rate, even if you aren’t planning on making a transfer right away. This can protect you against exchange rate fluctuations that would cost you money.
OFX’s Limit Order is another tool that you can use to take advantage of a favourable exchange rate. Basically, you tell us what your target exchange rate is. Once triggered, we’ll get in touch with you via SMS or email to let you know, and you can then complete your transfer using your favourable rate.
At OFX, you get 24/7 support on all your currency-related needs. Not all online money transfer providers will do that for you, and banks are restricted to operating within specific hours and days of the week. So, if you run into questions, you don’t have to delay a transfer. Just get in touch with us, and we’ll be happy to support you!
Legal and tax requirements for paying overseas sole traders in Australia
Because sole traders in Australia are responsible for setting aside some of the money that they earn in order to pay their taxes as part of the Pay As You Go (PAYG) system, you may not need to withhold any taxes from your sole trader’s pay if you’re hiring them from abroad.
Basically, as a business entity, the sole trader is responsible for following Australian tax laws, and that includes withholding and paying the right amount of taxes on time. On the other hand, you’re responsible for tracking your business earnings and expenses as well so you can pay the appropriate taxes according to your country’s tax laws.
The best places to find sole traders in Australia
Connecting with sole traders from Australia has never been easier. A few of the top websites where you can find talent include:
- Skill Post
Grow your business with the most talented Australian sole traders
With a variety of resources, from those that help you locate talent, to those like OFX that make paying international workers a snap, you can immediately begin connecting with sole traders from Australia to get things done. You’ll grow your business and save money, all while being able to improve your products and services with input and support from contractors who believe in what you do. What could be better than that?
*Delivery times are indicative and measured in business days from the time your funds are received by OFX.
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. UKForex Limited (trading as “OFX”) and its affiliates make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.