Working in NZ as an IT contractor

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jpoc

1043 posts

Uber Geek

#2192716 7-Mar-2019 00:08

Thanks very much every one. Lots of useful info.

Here is some more background:

The contract will be for a fixed term of 6 months and there will be no IT recruiter agency involved.

It is very likely that there will be work after that time but it is almost certain that it will be as an employee.

Given the above, my questions are:

How should I work? Sole trader, one man company or umbrella company such as Hnry?

I have worked as a one man company in the UK, or through umbrella companies in Germany, Belgium and Ireland.

Since this is only for 6 months, my initial thought is to go with an umbrella company.

How do I work out my rate?

I have never had to do this before. An agency has always been involved and I perceive this as a valuable service.

What can I reasonably expense?

I do not want to take the piss but nor do I want to make an extra donation to the govt.

Can I expense travel to the client's site, the proportion of my rent that can be assigned to home-office, part of my ISP bill, computer hardware?

Did I miss anything?

What about Kiwi saver?

If I use an umbrella company, do I need an accountant?

Do I need xero if I use an umbrella company?

solutionz

589 posts

Ultimate Geek
Inactive user

#2192822 7-Mar-2019 09:32

A lot of this depends on your specific circumstances;

What specific role? (Software Dev, Sys Admin or Consultant etc)
What are the client's expectations and contractual requirements (i.e. Liability, risks etc)
How often will you be paid and will it be fixed or as quoted / billable hours?
What's the going employee salary for this role?
Will you be supplying any goods to the client or managing inventory?
Will you be looking to claim any expenses beyond home-office & travel?
What's likely to happen after that 6 months?
How much do you plan to turnover in the next 6 & 12 months?

Depending on your answers there could be a lot to consider or you could start off very simply i.e.;

In the context you're looking to work for ONE client for 6 months...
You could start off as a sole trader - no registration required, just your IRD number.
Not register for GST (and don't charge GST) until your turnover nears $60k - even if you do go over you may be able to request an exemption if you don't plan to continue turning over $60k in the following 12mths due to contract ending / being employed / forming a company / going overseas.
Can forgo indemnity insurance if you have no contractual liability or client requirement & low risk (I've never had or needed & contracted for Govt, Ent etc).
Yes various home office and travel expenses can be claimed using specific foruma's & rates from IRD.
You can make individual voluntary Kiwisaver payments if you like but don't have to.
You probably don't need to use Xero if you have few expenses so the money would be better spent on a getting a bookkeeper to help with your end of year returns.
You will have to pay some ACC levies too.
If you start looking like you're turning over more than $60k, wanting to take on multiple clients, increasing risks etc then you can look at forming a company, registering GST and taking a shareholder salary; however if there's a chance the contract may end in employment etc it's probably not worth doing until you get to that point.
Your baseline rate is pretty much double the employee salary.

This is pretty much the way I went.

dzh

50 posts

Geek

Trusted

#2192849 7-Mar-2019 10:16

dejadeadnz:

I should also add that people need to think about insurance in a more sophisticated way than just "How likely can someone make our a case against me?". Depending on your scope of work and how robust your engagement terms are (but watch out for the problem of trying to exclude everything and risk shift everything to the client - people with a brain just won't go near you), your ultimate risk of being successfully sued may vary. But I can't stress this enough: just the threat of being gone after by a large entity -- with basically unlimited money to spend and the ability to access the best lawyers and professional witnesses that money can buy -- without any kind of insurance backup is scary and stupid. And don't assume that just because you provide advisory services, you won't need PL insurance. If you work on client sites or touch client's equipment, you should get PL, the cost of which is generally rather inconsequential compared to PI. Just amortise the costs into your hourly rates.

Is it for IT or developers too? Place I work begged me to come, didn't want anything. The impact on existing systems I can have is negligible, but there is some risk new app can cause some damage. I'd think thats really lays on testers heads tho...

solutionz

589 posts

Ultimate Geek
Inactive user

#2192871 7-Mar-2019 10:55

dzh:

Is it for IT or developers too? Place I work begged me to come, didn't want anything. The impact on existing systems I can have is negligible, but there is some risk new app can cause some damage. I'd think thats really lays on testers heads tho...

You're in the best position to quantify your risk.

What's the possibility of your actions damaging client property (inc losing data etc), causing compliance issues or causing non-trivial business interruption?

It may not be your client but your client's insurer going after you in these cases.

In your example you sound like a freelance developer who passes code onto the inhouse dev team for integration and testing. In that case I'd say fairly low risk - and any liability should be spelt out or waived in the contract.

However if you're pushing changes directly into production - this could be quite high risk and insurance would be recommended.

timbosan

2159 posts

Uber Geek

#2193179 7-Mar-2019 18:07

jpoc:

Thanks very much every one. Lots of useful info.

Here is some more background:

The contract will be for a fixed term of 6 months and there will be no IT recruiter agency involved.

It is very likely that there will be work after that time but it is almost certain that it will be as an employee.

Given the above, my questions are:

How should I work? Sole trader, one man company or umbrella company such as Hnry?

I have worked as a one man company in the UK, or through umbrella companies in Germany, Belgium and Ireland.

Since this is only for 6 months, my initial thought is to go with an umbrella company.

How do I work out my rate?

I have never had to do this before. An agency has always been involved and I perceive this as a valuable service.

What can I reasonably expense?

I do not want to take the piss but nor do I want to make an extra donation to the govt.

Can I expense travel to the client's site, the proportion of my rent that can be assigned to home-office, part of my ISP bill, computer hardware?

Did I miss anything?

What about Kiwi saver?

If I use an umbrella company, do I need an accountant?

Do I need xero if I use an umbrella company?

Just to clarify, is this a hourly rate contact for an initial period of 6 months, OR, a fixed term contract for 6 months? The two are VERY different. The hourly rate contract is a pure contract (in that you are self-employed, pay your own tax, etc.). The latter is more akin to an employment contract - you will be paid a salary pro-rated to the 6 months, the company hiring you will pay your tax.

If you are contracting just go with the sole trader option, I have never seen umbrella companies used here (I have contracted in the UK too).

Rate - basic rule of thumb is to take your salary and multiple by 2.5, then divide down. But that's VERY rough. Remember you get no sick pay or holiday pay as a contractor.

Expenses - there is a lot of information available directly from the IRD about this, or just get an accountant. There are several online-only ones in NZ, and lots of local ones (speaking as someone who lives in Auckland!)

Kiwisaver - totally your responsibility. I just work out 8% of my net pay and go from there.

Xero - several of the online accountants use this, personally i dont as I just code any transaction my account queries manually, and probably takes about the same amount of time. And I don't have to pay for Xero.

antoniosk

2358 posts

Uber Geek

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Lifetime subscriber

#2193196 7-Mar-2019 19:31

Whats the role?

makes it easier to answer the 'what should i charge' question

________

Antoniosk

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