Hints and tips for setting up for self-employment (especially tech-related)

Forums › Off topic › Hints and tips for setting up for self-employment (especially tech-related)

1 | 2 | 3 | 4

Networkn
32351 posts

Uber Geek

ID Verified

Trusted

Lifetime subscriber

#1484254 3-Feb-2016 11:46

* So it seems that I was on the right track with an HP laptop. Most I've seen (both Elite and Pro) seem to come with standard HDDs - even when I filter on PriceSpy down to those supposedly with SSDs (http://pricespy.co.nz/category.php?m=s257308269&o=produkt_pris_inkmoms#rparams=m=s257308296) the actual product, when I click through to it, still has a standard drive. Does one need to make a specific order for one with an SSD, or have it retrofitted?

* Printer - ok, may be sensible to scale back the budget from c $2k, but as mentioned by others cheaper models often have expensive consumables. Based on experience, I'm wary of inkjets - while the actual printing time can be quick, they seem to spend so much time flaffing about before printing! Are these OfficeJet X series supposed to be less frustrating in this way? There's a good chance that she may need to print out multiple copies of resources (eg hand-outs) for clients (eg, for workshops), hence why we need to plan for decent volumes. But this may not be needed initially - therefore one option is to start off with using our current set-up (mid-level consumer HP colour laser printer, and Canon inkjet MF for scanning)?

Thanks again everyone.

You can actually request a demo unit through a reseller for HP Printers, though to be fair every single person we have sold one too has been blown away. I don't believe marketing hype but I can tell you the 576 WILL print at 70PPM. Print quality is maybe 90-95% of a laser under 2K in our experience. Certainly never had a complaint. The X Series are cheaper to run, HP traditionally has been eye wateringly expensive.

If you just needed Mono, you can't go past the Brother MFC's they are AWESOME.

BruceHamilton

77 posts

Master Geek

#1484265 3-Feb-2016 12:04

A business plan is designed so an impartial reader can assess whether you have thought through all of the issues, especially if you are setting up a company - which also places obligations on the directors. Banks, insurance companies, IRD and other NZ govt departments, all want you to succeed, so offering a business plan to your bank to review provides a level of confidence for them, even if you don't plan on using their money or resources initially. Preparing a business plan is a good way of focusing on potential risks to the viability of the business.

Talk to an insurance broker about business insurance, they'll suggest suitable options. Note that using the family home as a business centre may affect some parts of existing home policies, depending on the nature of the business.

networkn

Networkn
32351 posts

Uber Geek

ID Verified

Trusted

Lifetime subscriber

#1484289 3-Feb-2016 12:31

I didn't setup a business plan, and haven't been required one, but never needed funding as such. I do however believe a business plan is important, as it makes sure you have a viable business for the longer term. Spotting competitors, identifying your niche or competitive advantage, growth opportunities etc is a good way to get your head straight.

It's also something to read if you become discouraged or lose your way a little. For most people running a business can be pretty hard work, and staff generally make this considerably harder. Having a well thought out vision is a good idea.

jonathan18

7413 posts

Uber Geek

ID Verified

Trusted

#1484329 3-Feb-2016 13:38

lxsw20:

HP ProBook or EliteBook with 3 year NBD onsite warranty, docking station, monitor, keyboard & mouse, ext HDD & shadow protect (or other backup solution) should be doable for 2-3k, maybe a little less.

Sorry, this is something I meant to ask more questions about: would our backup/cloud solution we currently use on our personal computers work for my wife's business needs?

We currently back up our main laptop using Cobian, which does regular incremental back-ups onto a NAS. We also store all critical files in OneDrive, which syncs across three computers as well as the cloud. We used to also be good about backing up the NAS onto external drives and storing those off-site, but have got lazy with this - however this is something we could easily return to doing.

I see from a run-down of free backup solutions (http://pcsupport.about.com/od/backup/tp/free-backup-software.htm) that a downside of Cobian is that it doesn't have a restore function; this isn't a too big an issue for personal use (as I'd take the opportunity to do a fresh OS install), but for a business this down-time I guess is undesirable.

Would one of the other free tools surveyed on that previous link such as Comodo Backup or Aomei Backupper be adequate for these purposes? Both seem to provide for full system back-ups and restores. Or are we best to stump up for a paid solution such as ShadowProtect? ($100 US for one year; they're not the best at updating their site, given they talk about it now providing support for Windows 8 (elsewhere it states it's Windows 10 compatible) and the site includes images of v4 when v5 is the current version.)

Thanks for any advice.

itxtme

2102 posts

Uber Geek

#1484361 3-Feb-2016 14:17

dclegg:

The one piece of caution I can give you is to watch out for provisional tax :-)

When I switched to being self employed (via my own company), I had never heard of provisional tax. In a nutshell, the IRD estimates what your next year's tax bill will be, and will expect payments throughout the year to cover it. When your actual tax bill is calculated, you'll have this provisional tax subtracted from the amount you actually owe (your terminal tax).

While the system mostly works well, it essentially means that in your first tax year it feels like you're paying double tax. You're actually not, but you'll have your terminal tax to cover, and the provisional tax for the following year.

As an aside to that: Get an accountant. It's so much easier.

But in saying that your first year tax is not taken provisionally. So you should be separating this amount out to pay anyway. For clarity to the OP

Create LLC on 1st April 16 - Pay no provisional tax, so start separating tax out so there is no bill shock the following year.

31st March 17 - End of tax year file tax forms and pay your previous years tax bill. Provisional tax starts NOW, start paying provisional tax

BruceHamilton

77 posts

Master Geek

#1484434 3-Feb-2016 14:49

Your accountant will inform you, but if you plan on setting up a company, you probably should be looking at setting up a " Look-through Company " aka LTC ( Google is your friend ) for tax purposes. This facilitates transfer of funds to directors, as well as offering various tax advantages. My accountant switched our small company to it when it first appeared in 2011.

jonathan18

7413 posts

Uber Geek

ID Verified

Trusted

#1484438 3-Feb-2016 14:58

BruceHamilton:

Your accountant will inform you, but if you plan on setting up a company, you probably should be looking at setting up a " Look-through Company " aka LTC ( Google is your friend ) for tax purposes. This facilitates transfer of funds to directors, as well as offering various tax advantages. My accountant switched our small company to it when it first appeared in 2011.

Good timing! I've just been reading up about LTCs, and had the same question as to whether this would offer any advantages in our situation. Will be sure to talk it through with the accountant.

Samsung

Shop now on Samsung phones, tablets, TVs and more (affiliate link).

benmurphy66

349 posts

Ultimate Geek

ID Verified

#1484441 3-Feb-2016 15:03

itxtme:
dclegg:

The one piece of caution I can give you is to watch out for provisional tax :-)

When I switched to being self employed (via my own company), I had never heard of provisional tax. In a nutshell, the IRD estimates what your next year's tax bill will be, and will expect payments throughout the year to cover it. When your actual tax bill is calculated, you'll have this provisional tax subtracted from the amount you actually owe (your terminal tax).

While the system mostly works well, it essentially means that in your first tax year it feels like you're paying double tax. You're actually not, but you'll have your terminal tax to cover, and the provisional tax for the following year.

As an aside to that: Get an accountant. It's so much easier.

But in saying that your first year tax is not taken provisionally. So you should be separating this amount out to pay anyway. For clarity to the OP

Create LLC on 1st April 16 - Pay no provisional tax, so start separating tax out so there is no bill shock the following year.

31st March 17 - End of tax year file tax forms and pay your previous years tax bill. Provisional tax starts NOW, start paying provisional tax

Or you can pay it in the first year and get a 6% (last time I checked) discount on your provisional tax for paying it early (first year only)

darylblake

1162 posts

Uber Geek

Trusted

#1484564 3-Feb-2016 16:43

FWIW

1) Have a business plan. And follow it. Be aware you will need to alter it and make changes but try to stick to it. If something isn't feasible or doesn't add up then you may need to make adjustments. Or simply spend the time doing something else.

2) Ask questions, in many cases advice is free, just make sure you seek out the right people.

3) The first year or two are usually the hardest by far, don't give up. Stay positive and make changes where necessary. Talking to other people who have set up startups before will help you immensely, especially people who are in the industry you operate in.

4) Learn to manage cashflow. If you get behind you will always be borrowing money to catch up again, try and stay out of that trap if possible.

5) Use social media, and read articles on items which relate to your business. Linkedin and Twitter are good places to network and its free, make an effort to meet people including clients. Your networking relations will be soo valuable.

6) Be sensible with what you buy to start off with. From a technical point of view cloud services are generally quite affordable, but tend to lock you into the products. They usually manage stuff like backups etc. But just be wary of lock in. Dropbox business is probably a good place to start storing your files, since you can make folders and share the folders with clients as well.

7) You have heard this from other people here, but get an accountant.

I wish you well.

antoniosk

2358 posts

Uber Geek

ID Verified

Trusted

Lifetime subscriber

#1484588 3-Feb-2016 16:59

Just an observation, if you intend to supply to government, depending on the area you're in (eg IT, Procurement, Policy and so on), you should investigate what is required to be able to participate.

Government has had a lot of review going on (driven by MBIE) to consolidate suppliers and try to standardise what they get as well as communicate minimum requirements for service.

What works for government may not be be appropriate for private sector and vice versa.

A key item will be around what sort of turnover you think you may have, where your costs are going to be, frequency of spending and expected services. The threshold for GST is about $60k turnover as I recall, but it's hard to justify setting up a LTD company if just one of you is going to work.

If you're a 'labour for hire' type supplier, think you'll find excel will be more than enough for accounting, but absolutely get an accountant. You can do most of the bookkeeping work yourself - it's really not that hard unless you have hundreds of transactions each month - and that will free you to focus on providing good service and a quality result.

________

Antoniosk

BlinkyBill

1443 posts

Uber Geek
Inactive user

#1484599 3-Feb-2016 17:12

darylblake:
FWIW

1) Have a business plan. And follow it. Be aware you will need to alter it and make changes but try to stick to it. If something isn't feasible or doesn't add up then you may need to make adjustments. Or simply spend the time doing something else.

Good advice to do a business plan. My business has 110 employees and every year I do a business plan; takes me about four weeks, not full time.

Then I put it in my bottom draw until the next year. I need to be agile and flexible and can't be a slave to the plan on a day-to-day basis. But the exercise of thinking about what I'm doing and where I'm going provides a strategic contact for my business activities. I'm in consulting.

lapimate

352 posts

Ultimate Geek

Trusted

Lifetime subscriber

#1484841 3-Feb-2016 22:43

jonathan18:...
* the LLC versus sole trader thing - for us one of the main reasons to consider the LLC is in its title; while we don't believe hers will be risky compared to many other newly established small businesses, we would be keen to avoid any chance of the business having a negative impact on our personal assets, eg the house. ...

Maybe talk to your lawyer about setting up a family trust, though it may already be too late if it can later be shown this is being done "in contemplation" of avoiding potential business liability. The company rules for directors are now quite onerous (in terms of liability) in regards to expertise/evidence-based decision making.

jonathan18:...
* Provisional tax - what are the obligations during the first year? ...

No worse really than PAYE that ordinary mortals have to pay.

LTC: annoying and artificial requirement for even a sole shareholder/employee to have a "contract of employment" if to be paid a salary

Dreal

417 posts

Ultimate Geek

#1484885 3-Feb-2016 23:44

dclegg:

The one piece of caution I can give you is to watch out for provisional tax :-)

When I switched to being self employed (via my own company), I had never heard of provisional tax. In a nutshell, the IRD estimates what your next year's tax bill will be, and will expect payments throughout the year to cover it. When your actual tax bill is calculated, you'll have this provisional tax subtracted from the amount you actually owe (your terminal tax).

While the system mostly works well, it essentially means that in your first tax year it feels like you're paying double tax. You're actually not, but you'll have your terminal tax to cover, and the provisional tax for the following year.

As an aside to that: Get an accountant. It's so much easier.

Most people don't make money in the first year. You still need an accountant, but if someone ends up paying a lot of tax, they are having a good first year.

Tap That - Great cheap tablets and tablet accessories. Windows and Android, NZ based

Dreal

417 posts

Ultimate Geek

#1484887 3-Feb-2016 23:46

LLC protects from liability/loss, but sole trader is less tax under a certain amount of income.

Also, insurance, and a lawyer, and an accountant. And good research and a calm disposition - because mistakes will be made.

Tap That - Great cheap tablets and tablet accessories. Windows and Android, NZ based

jonathan18

7413 posts

Uber Geek

ID Verified

Trusted

#1485007 4-Feb-2016 09:08

lapimate:

Maybe talk to your lawyer about setting up a family trust, though it may already be too late if it can later be shown this is being done "in contemplation" of avoiding potential business liability. The company rules for directors are now quite onerous (in terms of liability) in regards to expertise/evidence-based decision making.

Are you saying that, even if established as a LLC, my wife (as probably the sole director of the company) will retain certain liabilities that could place the assets held in her own name at risk? If so, can you please point me in the direction of some more information on this? Ta.

lapimate: LTC: annoying and artificial requirement for even a sole shareholder/employee to have a "contract of employment" if to be paid a salary

Yeah, I saw that requirement regarding an employment contract. While we're yet to discuss this with an accountant (can anyone recommend a good but affordable accountant in Palmerston North?), we had been thinking of arranging it for the company to pay my wife a salary, or more likely a minimum wage that would reflect additional work above the main contract(s) held by the company. Does the presence of an employment contract place all other aspects of employment-related legislation and compliance onto the "employer", who in this case would in practice also be the "employee"? Sounds fairly and potentially unnecessarily complex...

Dreal:

Most people don't make money in the first year. You still need an accountant, but if someone ends up paying a lot of tax, they are having a good first year.

I think my wife's 'business' is fairly different to many small businesses starting out, in that they are often starting completely from scratch, having to find business, market themselves, may be selling widgets or a service into a crowded and/or competitive market; I think, Dreal, you'd fit into this camp? That's a hard row to hoe! In her case, the foundation of the business will be one or two contracts making up the equivalent of what she already works now, so is likely to be financially viable from day one. (Indeed, the basis to the business is essentially like many of you IT workers will have done at some point - transitioning from employee to contractor.) As such we'll definitely be careful to save tax for that first year, and will look into this discount available if one elects to pay provisional tax in the first year.

1 | 2 | 3 | 4