Sole trader, limited liability company or what?

**marty** · 14th May 2009, 20:25

I'm currently in the situation of using my skills to provide services to people, services that people/businesses pay pretty good money for. At the moment I am simply employed part time in the role - paying PAYE, but am paying some ridiculous tax - all secondary. On top of that I have considerable expenses for training and upskilling - I have to pay for many of those out of my own pocket.

I am looking at ways of off-setting some of those costs, maximising the paying back of loans associated with my qualifications, yet still retaining some income from my services.

i do not intend employing anyone else at this time, and can't see that happening in the future.

Please - any small business/sole traders for some advice? By PM is fine.

**cowpoos** · 14th May 2009, 20:36

Originally Posted by marty

I'm currently in the situation of using my skills to provide services to people, services that people/businesses pay pretty good money for. At the moment I am simply employed part time in the role - paying PAYE, but am paying some ridiculous tax - all secondary. On top of that I have considerable expenses for training and upskilling - I have to pay for many of those out of my own pocket.

I am looking at ways of off-setting some of those costs, maximising the paying back of loans associated with my qualifications, yet still retaining some income from my services.

i do not intend employing anyone else at this time, and can't see that happening in the future.

Please - any small business/sole traders for some advice? By PM is fine.

This sort of thing is quite circumstantial...to get the best possible answer from people on here that actually know [of which I suggest there will be fuck all] ....you will have to reveal a fair bit more info than what you have...

Free advice when it comes to business is to always be taken with a grain or three...Talk to a accountant...it will be worth it in the long run!! a good one will pay for himself!

**marty** · 14th May 2009, 21:42

yeah i know. at least i'm not asking about filtering. or getting off tickets.

**cowpoos** · 14th May 2009, 21:51

Originally Posted by marty

yeah i know. at least i'm not asking about filtering. or getting off tickets.

true!! or about the 4x4 driver that almost cut you off while pulling into KFC!!

**YellowDog** · 14th May 2009, 21:53

The simplest answer will be to become a sole trader. You can use your IRD No. to enable you to charge and reclaim GST and you can offset all of your business expenses for working. Cash in hand is no good and you willneed to obtain invoices/receipts (even at teh bar) for everything you do with your profession.

As has already been said, you will need to appoint an accountant who will also be able to give you advise as to what percentage of your home power/telephone expenses you can also reclaim. The only sownsode is keeping track of it all. Your accountant will be able to advise you on the easiest way of doing this. I would personally trecommend Quickbooks as a great way to manage your business accounts. Your GST return will take you all of 3 seconds to produce.

Good luck.

**Ocean1** · 14th May 2009, 22:14

Originally Posted by YellowDog

The simplest answer will be to become a sole trader.

Yup. Unless the income is quite serious, then you need to consider other options.

And yes, talk to a good CA, ask around, the good ones aren't hard to find and unless you want to spend serious time studying the regulations yourself they'll save you money. Just never forget that you might pay 'em but they actually work for IRD.

Ask about shared home expenses, provisional tax and ACC levies in particular.

**blairh** · 14th May 2009, 22:26

If it's just you, then it's much simpler to just go Sole Trader. If it's getting bigger and there's lots of liability (eg if it goes wrong you'll owe TONNES of money) then start a limited liability company.

**MadDuck** · 14th May 2009, 22:33

Originally Posted by cowpoos

Talk to a accountant...it will be worth it in the long run!! a good one will pay for himself!

Or herself. Alas I have to admit to agreeing with Mr Poos - and that hurts! Much more information is required before any reputable Accountant would offer advice.

**Subike** · 14th May 2009, 22:52

Sol trader with the assistance of a good accountant and a business mentor,
dont be afraid to talk to the IRD about what you are doing,
From my own experiance the IRD talked more sence than a lot of other places.
If you have not done a small buisness management course then find time to do one, as well as a basic book keeping course if you dont already have those skills.
Be prepared to set aside time each week to keep everything in order.
Make sure you write a readable business plan on what you are doing and re-write it every few months as you learn, make sure that a person who knows nothing about your business could understand it.
Like Bank managers when you need to borrow that extra cash flow for what ever.
Investigate insurance covers especially public liability

**cowpoos** · 15th May 2009, 18:29

Originally Posted by MadDuck

Or herself. Alas I have to admit to agreeing with Mr Poos - and that hurts! Much more information is required before any reputable Accountant would offer advice.

and as an accountant by trade Mrs Madduck....Your advice would be orth its weight!!

Although I am surprised that there is a whole raft of sensible and logical suggestions coming forward.!!!

**Mully** · 15th May 2009, 18:44

Marty,

This bloke - Dave, www.taxrat.co.nz - is a good accountant. And a biker too.

I think he does "No obligation" initial meetings

**sinned** · 15th May 2009, 18:59

Don't base you future on ill informed opinion. Find a chartered accountant with a sound reputation and seek their advice on how to set up your business. It will cost you an hour or two at a cost of $300 to $800. Don't go for the cheapest quote - choose the one with the best reputation.
BTW: I am not an accountant - generally don't like them but value good advice.

**James Deuce** · 15th May 2009, 19:20

Make sure you have at least $60k in hand for the second year of operation's provisional tax bill.

That's all I have to say about that.

**tri boy** · 15th May 2009, 19:21

Sole trader, and buy liability insurance.

**Winston001** · 15th May 2009, 19:35

For the moment sole trader is appropriate - unless there is significant risk of liability. Could you be sued for what you do? If so, set up a company.

If you are being employed at the moment, be careful you aren't breaching any employment terms - I'm assuming you'll leave your job and set up your own business. Are you hoping to grab your employers customers?

There are free business advice services - check the web or your phone book.

You should get an accountant who can guide you on legitimate deductions. Tracking money is important and in that sense, GST is actually a good thing. You are forced to work out your income and expenses bi-monthly so you have regular snap-shots of how you are doing.