Tax rates for sole traders

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Forums › Finance and wealth management › Tax rates for sole traders

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GV27

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#2437569 13-Mar-2020 15:19

BlinkyBill:

itxtme:

Against personal assets being up for grabs if the business fails from creditors.

the business is a hairdressing business, providing a service. What creditors are there? It is bad advice to set up an LLC - the benefits are greatly outweighed by the costs and admin effort required. There are thousands of sole traders successfully operating in NZ.

Are you leasing premises? Do your premises have neighbors either side? Are you employing others? Are you signing agreements with suppliers? All could be considered exposure to risk of some sort. Risk needs to be managed.

There is no hard and fast rule for structures. Your accountant will advise you based on your specific circumstances and make a suggestion from there.

dejadeadnz

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#2437572 13-Mar-2020 15:30

GV27:

Are you leasing premises? Do your premises have neighbors either side? Are you employing others? Are you signing agreements with suppliers? All could be considered exposure to risk of some sort. Risk needs to be managed.

There is no hard and fast rule for structures. Your accountant will advise you based on your specific circumstances and make a suggestion from there.

Accountants would be some of the worst people to go to for this kinds of issues you are talking about. Most of the exposures you cited above are legal in nature, which accountants are not experts at. Public liability risks can be easily managed via PL insurance. It doesn't cost much. How much do hair products cost?

In terms of exposure from leases, many landlords will demand a personal guarantee. And don't think just moving your assets off before you sign the Deed of Guarantee will help - there are deemed insolvent transaction provisions that could well catch you out. In a lot of instances, certain personal risks of going into businesses can't be avoided and/or can be much more easily and efficiently managed using other means than just going to self-promoting accountants and lawyers who make a living out of advising you to use the most complicated structure available. Professional advice is helpful and relevant but people need to choose their advisors carefully.

GV27

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#2437581 13-Mar-2020 15:54

dejadeadnz:

GV27:

Are you leasing premises? Do your premises have neighbors either side? Are you employing others? Are you signing agreements with suppliers? All could be considered exposure to risk of some sort. Risk needs to be managed.

There is no hard and fast rule for structures. Your accountant will advise you based on your specific circumstances and make a suggestion from there.

Accountants would be some of the worst people to go to for this kinds of issues you are talking about. Most of the exposures you cited above are legal in nature, which accountants are not experts at. Public liability risks can be easily managed via PL insurance. It doesn't cost much. How much do hair products cost?

In terms of exposure from leases, many landlords will demand a personal guarantee. And don't think just moving your assets off before you sign the Deed of Guarantee will help - there are deemed insolvent transaction provisions that could well catch you out. In a lot of instances, certain personal risks of going into businesses can't be avoided and/or can be much more easily and efficiently managed using other means than just going to self-promoting accountants and lawyers who make a living out of advising you to use the most complicated structure available. Professional advice is helpful and relevant but people need to choose their advisors carefully.

My response was more geared at the blanketness of the statement "It is bad advice to set up an LLC - the benefits are greatly outweighed by the costs and admin effort required." which is equally as bad as "you definitely need some unwieldy complicated structure totally unsuitable for your actual needs."

BlinkyBill

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#2437590 13-Mar-2020 16:25

itxtme:

Dont be a knob, I gave my opinion and that was before the OP had even stated the profession.

Unfortunately for you and others, I am opposed to providing opinions that cost others time and money without having the prerequisite information.

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