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Thread: Set up a Sole Trader while employed

  1. #1
    Join Date
    Sep 2017
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    Hong Kong
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    Default Set up a Sole Trader while employed

    Hi there,

    A quick question for setting up a sole trader while employed.

    Are NZ allow to set up a side business as a sole trader and at the same time I was employed by other company? ( of course PAYE)

    If any lost of profit on my side business can it be able to offset my PAYE?

  2. #2
    Join Date
    Feb 2008
    Posts
    37,186

    Default

    What kind of "NZ" are you asking about? - work visa holder, resident, citizen...?

  3. #3
    Join Date
    Nov 2013
    Location
    New Zealand
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    39

    Default

    Quote Originally Posted by reevelau.nz View Post
    Hi there,

    A quick question for setting up a sole trader while employed.

    Are NZ allow to set up a side business as a sole trader and at the same time I was employed by other company? ( of course PAYE)

    If any lost of profit on my side business can it be able to offset my PAYE?
    As long as you have an IRD number you can become a sole trader with the following restrictions:
    - if you have a visa (like previous poster mentioned) that it allows you to do this
    - your employment agreement allows it. Often its a good idea to let your manager know you are doing something on the side to avoid any conflicts of interest / loss of trust down the line

    Things to watch out for:
    - you will have your own ACC levy to pay
    - you will be fully liable for any mistakes you make (as opposed to a limited liability company) so depending on work type you might like to get insurance
    - its a good idea to have a book keeper help you get used to tracking expenses, deductibles and filling out your tax returns.
    - have your own dedicated bank account / credit card etc for biz related expenses helps alot
    - once you are making some money look at using xero or myob to make your accounting easier
    - if you are GST registered and not making a profit you can get GST refunds (of course, once you start making a profit you have to pay GST)
    - you can claim some amount of your home office as an expense against your income. But this is normally offset by book-keeping, accounting, ACC costs so can be of marginal benefit

    When I've done sole trader for myself in the past once I added up all the extra work I had to put into tracking costs, accounting advice etc I worked out I was only making $2/hr. But then - I learnt heaps about biz expenses etc so there is that.

  4. #4
    Join Date
    Sep 2017
    Location
    Hong Kong
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    Default

    Quote Originally Posted by JandM View Post
    What kind of "NZ" are you asking about? - work visa holder, resident, citizen...?
    Hi there,

    I am in PR visa, currently working and PAYE.

    Just wonder if loss profit from the side business can it be able to offset the PAYE, in order to minimize the risks.

  5. #5
    Join Date
    Nov 2013
    Location
    New Zealand
    Posts
    39

    Default

    yup. 50% phone costs and a percentage of any other related costs based on how much room your home office takes up.

    To see a summary of how this works check out https://www.bdo.nz/en-nz/insights/co...ffice-expenses

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