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Thread: Setting up as a contractor (self employed)

  1. #1
    Join Date
    Oct 2005
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    Havelock North
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    97

    Default Setting up as a contractor (self employed)

    Hi all, Ive been offered a couple of options re self employed (contracting) work as the 8 till 4.30 hours aint as appealing as they were when I started

    I'm wondering if anyone has went self employed and how easy it is to set it up ? registering with IRD and any pitfalls to look out for etc,

    I have been told by one guy what my set up costs would be + buying a van, its not cheap so I want to be sure and a little inside info would be much appreciated, it seems that they have work available and would supply the work and anything else I get would be mine

    I havent said what type of work for personal reasons but its legit type of work

    Thanks in advance
    Albert

  2. #2
    Join Date
    Mar 2006
    Location
    Wellington (from Beds, UK)
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    1,099

    Default

    i can't really help on that - other than to say if you earn over a certain (fairly low) amount per year you'll need to register for and charge GST.

    whats up with working 8-4.30 anyway - sounds pretty cushy to me!

  3. #3
    Join Date
    Jul 2005
    Posts
    1,521

    Default

    Albertz,

    Your first step need to be to interview some accountants if you have not done this already. While you can certainly do your own accounts - its probably best not to unless you know what you are doing. Also, use this interview process to get some idea of what it will mean to you to be self employed. They shouldnt charge for an introductory session, and should go over the basics - explaining to you your options as to how to work as a self emplyed person.

    You need to decide whether to start a company, or whether to be a sole trader. A sole trader really just means you work in your own name.

    You may also need to interview solicitors. You will need one to set up a company anyway - and its always a good idea to have a solicitor in your "back pocket" just in case you need them anyway.

    You wont need a new IRD number as far as I know (certainly you dont if you are a sole trader), but as Trigirl says - you will need advise about becoming GST registered. The accountant can help with that.

    Be sure that you are comfortable with good record keeping - its a must for self employment. Make sure you keep all reciepts - you need to keep all paperwork for 7 years for the IRD - so you need to be organised and sort out "systems" to help you with this.

    It can all be a bit of a pain - but there are substantial benefits to being self employed - especially from an income tax point of view. A good accountant can make you significant savings in your yearly tax bills

    Also just bear in mind - you need to account for holidays and sick pay - as noone is going to pay you for it - on the other hand - theres none of this having someone else say you can only take 2 weeks holiday a year!

    Discuss with the accountants how your set up costs will affect you - you may find its not as bad as you think. Your set up costs come out of your "profit" but that means you have less "profit" to pay tax on - so the money that ends up in =your pocket is more that you may have thought.

    Does that help at all?

    Hxxx

  4. #4
    Join Date
    Jun 2005
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    UK>Welly>Boonies>where next?
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    ^^^^ What Av said.

    Great advice from Av there, saves me typing it again.

    Albert, we had great fun interviewing and picking an accountant and solicitor recently as we've just moved from Wellington. We did the same when we arrived in NZ too.

    It's all very easy to do, we did it in our first week of arrival as OH was contracting, but you do need good accounting systems in place and be religious about keeping them up to date and claiming what you can too.

    You could ask anyone else you know who is self employed if they would recommend theirs (or not) and start visiting them from there.

    Good luck, let us know what you decide and what you'll be doing. The suspense is killing me.

  5. #5
    Join Date
    Oct 2005
    Location
    Havelock North
    Posts
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    Thanks for the prompt replies, I had forgot about an accountant, I only thought I'd need him at the end of year 1 , i'll just be working in my own name so nothing major there,
    I'll ask about and get an accountant sorted out if I need one (not sure if i'll ever take the plunge, been a wage earner for 30 years so it may be too big a jump for me lol, time will tell)
    No need for anymore suspense Smiler, 1 offer is carpet contracting (never laid a carpet before lol) and the other is working installing sky and the likes.
    Have the work flexibility point of view interests me so we'll see

    Albert

  6. #6
    Join Date
    Oct 2006
    Location
    Waterloo, Lower Hutt
    Posts
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    The legal side of setting up a business is very simple in NZ and low cost.

    If you work as a sole trader you do not have a separate IRD/GST number for your business and you do not need to register.

    If you decide to set up a company, the registry costs are from $50 and a quick n easy annual return that is filed online each year. Accountants usually do charge more for completing a companies accounts compared to a sole trader, though you may also be able to reduce your final tax bill to compensate.

    Some accountants use a fixed fee and others use a hourly rate which then matches the time taken to your bill rather than a fixed fee. I also know of accountants that use a mixture of the two.

    You would (in most likelihood) need to register for GST which is charged at the rate of 12.5% of the sale price.

    Good records are essential, though good software is available for a very reasonable price.

    Shawn

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