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3221 posts

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#268338 13-Mar-2020 08:55
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The business my partner was employed at unexpectedly went into liquidation and closed it's doors, so she is wanting to set up as a sole trade in the same industry.

 

I'm trying to find info on the IRD website as to what the tax rates for a sole trader are, but aren't having much luck.

 

Is it the same rates and thresholds as PAYE?





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2230 posts

Uber Geek


  #2437318 13-Mar-2020 09:02
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Speak to an accountant.🙂

 

As a sole trader she's going to need one anyway.





"I have noticed even people who claim everything is predestined, and that we can do nothing to change it, look before they cross the road." -  Stephen Hawking




3221 posts

Uber Geek


  #2437319 13-Mar-2020 09:03
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floydbloke:

 

Speak to an accountant.🙂

 

 

We have an appointment with one this afternoon, just trying to suss out as much as a can beforehand.


 
 
 
 


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Ultimate Geek


  #2437336 13-Mar-2020 09:30
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Yes, same as individual.





BlinkyBill


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  #2437338 13-Mar-2020 09:35
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Yeah just normal rates, eg https://www.classic.ird.govt.nz/calculators/keyword/incometax/calculator-tax-rate.html

 

Then add to that your ACC Levy https://www.acc.co.nz/for-business/paying-levies/calculate-your-levies/

 

I would strongly recommend a self-employed person use ACC Coverplus Extra - you pre-agree on a level of cover so no need to prove income if you are off work (which can be difficult with fluctuating self-employed income).

 

 

 

Accountant should help you with all this anyway.


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Ultimate Geek


  #2437346 13-Mar-2020 09:42
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Inland revenue run some helpful workshops that greatly assist in understanding tax matters, obligations and timings. There is also a useful cash book you can download from the IR website that helps in record keeping. It is useful to attend the workshops and use the cash book.

 

this assumes the business is a single-person services type of business with no/limited assets. 





BlinkyBill


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  #2437413 13-Mar-2020 10:33
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Also seek advice from an accountant and/or solicitor on what the best way to set up is. Do not assume a basic sole trader scenario will be the most tax efficient/asset protection efficient method.






367 posts

Ultimate Geek


  #2437417 13-Mar-2020 10:37
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Delphinus:

 

Yeah just normal rates, eg https://www.classic.ird.govt.nz/calculators/keyword/incometax/calculator-tax-rate.html

 

Then add to that your ACC Levy https://www.acc.co.nz/for-business/paying-levies/calculate-your-levies/

 

I would strongly recommend a self-employed person use ACC Coverplus Extra - you pre-agree on a level of cover so no need to prove income if you are off work (which can be difficult with fluctuating self-employed income).

 

 

 

Accountant should help you with all this anyway.

 

 

 

 

+1


 
 
 
 




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  #2437427 13-Mar-2020 10:51
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Thanks everyone.


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  #2437429 13-Mar-2020 10:51
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Dont know industry etc. as far as risk goes or your personal situation ie. do you own a house?  If yes to any then the accountant will likely suggest a LLC so your personal assets are *more* protected.  Interestingly its actually very easy to do yourself, and will cost you $105.00 to set up.  An accountant will probably charge $1000 for the same thing




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  #2437447 13-Mar-2020 11:07
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itxtme:

 

Dont know industry etc. as far as risk goes or your personal situation ie. do you own a house?  If yes to any then the accountant will likely suggest a LLC so your personal assets are *more* protected.  Interestingly its actually very easy to do yourself, and will cost you $105.00 to set up.  An accountant will probably charge $1000 for the same thing

 

 

She's a hairdresser, so purely a service based industry. She is looking to rent space in an existing salon, so risk is minimal.


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Ultimate Geek


  #2437460 13-Mar-2020 11:23
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itxtme:

 

Dont know industry etc. as far as risk goes or your personal situation ie. do you own a house?  If yes to any then the accountant will likely suggest a LLC so your personal assets are *more* protected.  Interestingly its actually very easy to do yourself, and will cost you $105.00 to set up.  An accountant will probably charge $1000 for the same thing

 

 

In the context described by the OP, protected against what?





BlinkyBill


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  #2437467 13-Mar-2020 11:42
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Against personal assets being up for grabs if the business fails from creditors.  


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Ultimate Geek


  #2437526 13-Mar-2020 12:57
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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.





BlinkyBill




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  #2437554 13-Mar-2020 14:04
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We'll see what the accountant says, but with minimal overhead and risk I would have thought sole trader would make more sense.


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  #2437567 13-Mar-2020 15:09
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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.

 

 

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


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