Independent Contractor implications? Overview?

[GrumpyGoat]

I was hoping one of the independent contractors on this forum would be willing to share with me an overview of the tax implications, filings, etc for the year.

Do you operate as a sole trader? Does the company you contract with withhold taxes? Do you file GST yourself? What do you file/when?

What about expenses? How liberal/strict are the deduction rules?

I am trying to get through the "official" reading but it is a bit difficult to figure out when/where to apply certain rules.

Do you hire an accountant or DIY?

I have a lot of US experience as a business manager/accountant and am competent to handle most of this stuff if I can just get a handle on it. And the best way to understand is if someone will relate some actual experience.

PLEASE PLEASE and Thank you!!!

[GrumpyGoat]

Oh come on--someone here knows this info!!!

Pretty please with sugar on top??

[Arwen]

Oh sorry GG, I'm absolutely hopeless when it comes to all things money.

I'm hoping to eventually set up my own music related business, and I was going to ask YOU for advice!!!

[GrumpyGoat]

Oh sorry GG, I'm absolutely hopeless when it comes to all things money.

I'm hoping to eventually set up my own music related business, and I was going to ask YOU for advice!!!

Give me a bit of time and I will figure it out!! I should be ready for you in a couple months.

[Arwen]

That's my girl.

[benandclare]

I operate as sole trader and use the services of SBA , adverts on tv, to do my tax returns. It costs me $300 per year and is of course deductible.
I claim for all manor of stuff for example, a %, cant remember exact figure, of house as an office, same % for electric, telephone, internet.

As most of my income is from my time I dont charge GST so dont have that hassle.

I'd talk to SBA and maybe get them to do your accounts for first year then DIY, they'll be able to let you know all the in and outs and relevant NZ tax rules

[phatsharpie]

Hi GrumpyGoat,

I don't know all of the details yet, but here are some things I do know now:

1) Are you an US citizen (not sure but you have US experience, so I thought you might be)? If so, please be aware that you are required to pay US self-employment tax (~15.3% of net income) as an IC even while overseas.

2) The company you are contracting with will not withhold taxes - as an IC, you will be responsible for your taxes. You should be paying provisional taxes throughout the year (like the US estimated taxes) to the IRD - I believe you pay 2 to 3 times an year. And at the end of the tax year you'll submit an IR3 tax form.

3) Yes, you can deduct business expenses - I am not sure how much/less strict the IRD is when it comes to the deductions.

-B

[GrumpyGoat]

I operate as sole trader and use the services of SBA , adverts on tv, to do my tax returns. It costs me $300 per year and is of course deductible.
I claim for all manor of stuff for example, a %, cant remember exact figure, of house as an office, same % for electric, telephone, internet.

As most of my income is from my time I dont charge GST so dont have that hassle.

I'd talk to SBA and maybe get them to do your accounts for first year then DIY, they'll be able to let you know all the in and outs and relevant NZ tax rules

I may very well do this. I do know several accountants that I may approach initially. But if that doesn't work out, thanks for the referral.

[GrumpyGoat]

1) Are you an US citizen (not sure but you have US experience, so I thought you might be)? If so, please be aware that you are required to pay US self-employment tax (~15.3% of net income) as an IC even while overseas.


-B

I will probably chose to incorporate and be an employee due to IRS Pub 54. I won't be sending any money to the US for bombs. No thanks.
I would rather pay the 30% corporate rate in NZ.

[phatsharpie]

I will probably chose to incorporate and be an employee due to IRS Pub 54. I won't be sending any money to the US for bombs. No thanks.
I would rather pay the 30% corporate rate in NZ.

Hi GrumpyGoat,

Please make sure you talk to an accountant familiar with US-international tax laws before you move forward. I've been looking into this issue because I will be working as an IC when I first land in NZ. If you are going to establish a company in NZ, you may need to file a tax form 5471 to the IRS every year. Furthermore, depending on the number of US individuals owning the corporation, you may have to pay the self employment tax or US corporate income tax.

http://www.taxmeless.com/page12.html

http://www.rpifs.com/AICPA/form5471.htm

Best of luck!

-B