A question about tax and all things contractor

[nzspokes]

Ouch....time to find an accountant then.




I am not GST registered as I will be earning <60k (the threshold)

As I said this can get out of hand fast, get good advice. You pay them a good chunk of coin but I have found it is worth it.

[R650R]

And expect to get raped by ACC at some random stage...

Btw if you use an accountant IRD are slightly more flexible with mistakes and accountant will Prob pick them up for you. And also you won't have to file it all before July 7 like when doing it yourself.

[bogan]

Yeh go with a bean counter, chances are they will save you more than they cost since they know where to put all them beans.

For example, you know about the IETC right? there's the accountant's bill discount in one hit!

I do low volume non GST registered stuff, claim back on household but not petrol, cost about 500 per year; well worth it imo.

[Ocean1]

For the size of your business you should be able to find a CA for a grand per year or less.

When I first approached an accountant I'd been doing my own tax returns, but it was getting complicated enough that I wanted help. I asked him to prepare year end accounts and tax returns and told him I'd be doing a return as usual also.

I said that I'd be paying him out of savings he would make compared to my return, and that with being a professional and all he shouldn't have too much trouble.

Took him 10 minutes to stop laughing, but he agreed. I'm no idiot when it comes to my own money, but he paid his own costs for the next 25 years, until he retired last year.

Oh yeah, and find out about provisional tax and ACC levies before one of them kills your shiny new business. Can't go too far wrong by simply leaving 25% of all income in a separate account.

[Brett]

Yep...definitely agree with the accountant route. I happily pay an accountant these days to manage my personal and various business tax obligations. I have studied accounting in my business degree and used to file my own returns. I would say I have a moderate understanding of accounting in general. I have realised that:

a) I hate working with the taxation system;
b) I am better off spending that time earning extra moolah
c) an accountant usually finds ways to minimise my tax that I hadn't thought of.

Oh...and be aware of the 80% attribution rule...a bugger for contractors in many cases.

[mashman]

As someone who is a self-employed contractor, how complicated is it to file my taxes?

Assuming I am someone who has never done it before, is it straight forward or should I get an accountant to sort it?

I understand that as a contractor, I am eligible for tax deductions - I've been saving my petrol receipts per the advice of a colleague, however I am not sure if what they said is right - it sounds too good to be true. They mentioned I can get 15% of my fuel bill off my end of year tax dollars owed to IRD, is this true?

I did it the simple way. Claimed nothing. IR3 form, IR10 (not claiming expenses is a foreign concept to IRD), GST (if registered), ACC (if applicable). If the money is more important, see an accountant.

[Ender EnZed]

As someone who is a self-employed contractor, how complicated is it to file my taxes?

It sounds like you don't have a shit tonne of income to work though so it's not likely to be a difficult job. Ask around (not just on KB) for an accountant who might be appropriate. Arrange a meeting, ask the questions you want answered, pay for his time.

It'll be about $100 for 20 mins but it'll be way better value than paying him to do the whole job, provided you ask the the right questions.

[The End]

It sounds like you don't have a shit tonne of income to work though so it's not likely to be a difficult job. Ask around (not just on KB) for an accountant who might be appropriate. Arrange a meeting, ask the questions you want answered, pay for his time.

It'll be about $100 for 20 mins but it'll be way better value than paying him to do the whole job, provided you ask the the right questions.

Sounds like a good start at least, I'll give it a go.

[Erelyes]

Here's what I'd do.
1) Read the IR375 for starts. Front to back. Rinse and repeat. The second time through, have some post-its to flag things you don't understand.
2) Call them. Ask all your stupid questions, write down what they say. Shit, even set up voice recorder on your mobile and put em on speakerphone or whatever, then come back to that.
3) Then read the IR375 once more. You should be getting it now! 1st October '86, zero-rated vs exempt, etc etc.

The above applies regardless of whether you plan to earn over 60k.

Then do the exact same with the IR3g and IR10g.

THEN if you have to go see an accountant you will have knocked some time off the bill by omitting the fucktard questions. Plus you can work out whether they are telling you to do dodgy shit (guess what, doesn't matter if your accountant says 'do this' or 'do that'... if they get it wrong, you still have a bill... or, expenses you could have claimed but can't any more)

If you're reading the above and thinking it seems like a lot of work, you shoulda never bothered with the question.

Enjoy and report back

[HenryDorsetCase]

I am using my Hornet for commuting to/from work, as well as work errands. However this also gets personal use too.

As I said above, I am completely new to all of this so may have been doing things wrong already, or have the wrong impression of how things work...

your biggest issue will be whether you are in fact an employee or actually a contractor. In technical terms whether you operate under a contract of service (an employee) or a contract for services: i.e. a bona fide contractor. A Court, asked to decide, will look at the actual relationship, not just the contract: relevant items are the sorts of things you would imagine: who pays what, ACC and tax, and whether you are actually available to other parties to do work for them. Many unscrupulous fucktards will sack employees because they do not want the hassle: having to pay PAYE, provide holiday leave, and sick pay and a proper employment contract etc. So they make the employees redundant and then hire them back as "contractors" and dont have to stress about that shit - its all on the contractor to sort out.

When you "negotiated" your hourly rate, did you factor in stuff like that, or is it an effective pay cut because if you dont work you dont get paid, and there is zero security.

My advice to you is talk to an accountant. Preferably one with some experience in the industry you are in. They will tell you if your charge out rate is reasonable, what sort of shit you have to budget for blahdeblah. The wonderful worlf of fucking provisional tax awaits you by the way.

At the very least you should be getting your "employer" to deduct RWT from payments they make to you: there are industry specific rates I think: but it will make filing your EOFY stuff easier if you have paid tax already.

You might also get into the fabulous and exciting world of GST. Bet you can't wait.

A little bit of money spent now will reap dividends in the future.

[Ocean1]

your biggest issue will be whether you are in fact an employee or actually a contractor.

First thing IRD will look at is "Does 80% of your revenue come from one source?".


I use several part time contractors, paying them appropriately. If I had to actually do the employer thing I'd simply shut the door, can't be fucked with the hassle.

[AndyR1]

First I would do a free seminar for GST and RIT at the RID branch of you choice - check out their website for this. This is the basic you need and you got a lot of very valuable information out of these 2 seminars!

Then you can decide depending on your business and volume of invoices you need to handle if it's worth to use an accountant.

There is even an Excel based system for your GST/RIT available where you can have a look at under http://www.xceltax.co.nz/

I'm doing all my GST/RIT tax stuff alone based on my own Excel sheets/records. It's up to you how good you can develop your own process to handle these things on your own but doing a GST return for instance doesn't even take me more than 5min if you are continuously doing your books.

[The End]

First I would do a free seminar for GST and RIT at the RID branch of you choice - check out their website for this. This is the basic you need and you got a lot of very valuable information out of these 2 seminars!

Then you can decide depending on your business and volume of invoices you need to handle if it's worth to use an accountant.

There is even an Excel based system for your GST/RIT available where you can have a look at under http://www.xceltax.co.nz/

I'm doing all my GST/RIT tax stuff alone based on my own Excel sheets/records. It's up to you how good you can develop your own process to handle these things on your own but doing a GST return for instance doesn't even take me more than 5min if you are continuously doing your books.

As far as invoicing goes, I am working for one person, as a contractor, invoicing them weekly. So come March there would be around 35 invoices. I've contacted a few accountants and am yet to hear back. They'll probably laugh me away anyway!

[AndyR1]

As far as invoicing goes, I am working for one person, as a contractor, invoicing them weekly. So come March there would be around 35 invoices. I've contacted a few accountants and am yet to hear back. They'll probably laugh me away anyway!

Yes I asked one too and he told me to do it on my own...do these IRD seminars and create some nice Excels ala CashBook etc. - go from there. I have 12 invoices per year and perhaps 100 for expenses incl. depreciation - you can do that

[Akzle]

As far as invoicing goes, I am working for one person, as a contractor, invoicing them weekly. So come March there would be around 35 invoices. I've contacted a few accountants and am yet to hear back. They'll probably laugh me away anyway!

you're employed. sorry to say. you can't claim shit, except sick leave and holidays and shit.