[SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
Hi folks. I'm about to start contracting and it seems it's a lot more efficient to have things wrapped into a company. I've been looking around and seeing stuff about the "80/20 rule" and the like, which determines whether you can apply company tax instead of personal income tax, and other stuff. So does anyone out there have any (IANAA) advice on such things? Any recommendations of accountants to get advice from? Ideally accountants who can deal with free-software ledger systems... Oh and yes, those of you wondering, I'm back in Sydney. -- Rev Simon Rumble <[EMAIL PROTECTED]> www.rumble.net The Tourist Engineer Geeks need vacations too. http://engineer.openguides.org/ "If Jesus saves, why is he always asking for money?" - landoverbaptist.com -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
On 9/21/06, Rev Simon Rumble <[EMAIL PROTECTED]> wrote:
Hi folks.
I'm about to start contracting and it seems it's a lot more efficient to
have things wrapped into a company. I've been looking around and seeing
stuff about the "80/20 rule" and the like, which determines whether you
can apply company tax instead of personal income tax, and other stuff.
So does anyone out there have any (IANAA) advice on such things? Any
recommendations of accountants to get advice from? Ideally accountants
who can deal with free-software ledger systems...
IANAA, but I've been there.
Maintaining a pty ltd {I.E. acn} company is expensive. You're up for a
minimum of around $2000 a year in accountant fees, fees maintain the
company name, annual returns etc. You don't HAVE to do it this way -
but a lot fo contracting agencies still insist on it. You can go down
the ARBN route - I have no idea what that costs. You can check out the
hoops you need to jump through here
http://www.asic.gov.au/asic/asic_infoco.nsf/byheadline/Starting+a+company+or+business?openDocument
You've also got to consider that you have to run your own
superannuation if you decide to go down the company route - and you do
NOT want to fall behind or neglect it - APRA/Tax are ruthless about
chasing super input - more so than chasing tax. Of course, this means
another lot of accountant fees, as the super fund has to be audited
every year and have its own tax return. This is on top of the company
tax - from memory, I was paying about $2000 a year for the company tax
matters, and probably $2500 a year for the super fund tax matters, as
they were more complex.
The rules for contracting have moved on from the old days of the 80/20
rule, especially with the current government focus on
outsourcing/contracting, but the basic rule of thumb is - if you're
expecting a contract to last more than 12 months, you could be in
trouble with the tax office.
Note that I said COULD - it usually comes down to individual
determinations. If the company who is employing you can provide proof
you are a genuine contractor, not a backdoor employee, then the tax
office will overlook it - but it can be a nasty route to prove.
The best advice I can give is find a damn good accountant - because
you're going to need one. The rules are horrendous, and change each
and every single year.
There are advantages - you can buy a lot of "business related" stuff
and pay for it pre-tax - saving you loads in tax - but you have to be
careful that the stuff is related to the industry you're in, or
genuinely necessary for your business. Again - talk to an accountant
about stuff you can do - for example, if you work from home, determine
a percentage of your rent/mortgage that is used by your business
{space, time, electricity etc} and pay for that from the business,
pre-tax.
Did I mention you should talk to an accountant? :-)
OK, enough off-topic wafle. Talk to an accountant, OK?
DaZZa
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Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
> I'm about to start contracting and it seems it's a lot more efficient to > have things wrapped into a company. Not sure it's worth it for a small operation (sole trader or partners); you can just get an ABN and get going. - Jeff -- linux.conf.au 2007: Sydney, Australia http://lca2007.linux.org.au/ "MySQL supporters are like people who believe that the moon landings were a hoax. No matter what contrary information they're confronted with, they still consider MySQL to be the best." - ttfkam -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
Hi Simon, Ive been both a contractor and also permanent staff on and off for many years... There is a good reason to get a PTY Limited company in that is says LIMITED. In short it means that if you do something WRONG they can only sue the COMPANY for every cent it has. Leaving YOU with your house and car and other possessions intact. If you only have a business name and you do something WRONG then they can not only sue every cent from your BUSINESS but ALSO every cent YOU own INCLUDING your house and car and other possessions. We are not talking about deliberate wrongdoing here just stuffing up. So it's more expensive for a PTY Limited company but you have that protection. The company is treated like an individual and the company cops the flack. Not you. Your choice. Is it worth the risk in these litigious days? Also the 80/20 rule don't worry about it. The tax office only gets upset when you try to defraud it of tax. If you pay your correct amount of tax then the tax office does not care at all about how many contracts you have. I had one and only one contract with a government dept for 8 years and no problem. I paid the correct amount of tax. It may well happen that you get a good client for a year or so. What is the tax dept. going to do? Say get a job elsewhere? No. Pay the right tax and you won't hear a word. Contact me off-list for a couple of accountants you can choose from. Hope you'll like doing BAS statements! Ben Rev Simon Rumble wrote: Hi folks. I'm about to start contracting and it seems it's a lot more efficient to have things wrapped into a company. I've been looking around and seeing stuff about the "80/20 rule" and the like, which determines whether you can apply company tax instead of personal income tax, and other stuff. So does anyone out there have any (IANAA) advice on such things? Any recommendations of accountants to get advice from? Ideally accountants who can deal with free-software ledger systems... Oh and yes, those of you wondering, I'm back in Sydney. -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
Rev Simon Rumble wrote: Hi folks. I'm about to start contracting and it seems it's a lot more efficient to have things wrapped into a company. I've been looking around and seeing stuff about the "80/20 rule" and the like, which determines whether you can apply company tax instead of personal income tax, and other stuff. So does anyone out there have any (IANAA) advice on such things? Any recommendations of accountants to get advice from? Ideally accountants who can deal with free-software ledger systems... Oh and yes, those of you wondering, I'm back in Sydney. Unless you have a really good reason, don't do it. There are plenty of costs associated with your own company (super, public liability, accountant, etc.). Unless you can genuinely make write offs then there is precious little benefit and you are going to have to pay tax on your profits at some stage. Hardware you can probably depreciate personally anyway. The big benefit is writing off travel/home office expenses. But, if you can't prove that you are servicing a number of clients then you /could/ get stung by the tax people. Best off to work through an agency and let them fight your battles for you. Incidentally, I am intending to return to contracting next year and that is what I will be doing! -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
> Hardware you can probably depreciate personally anyway. > > The big benefit is writing off travel/home office expenses. You definitely don't need a Pty Ltd to claim for business related expenses! - Jeff -- linux.conf.au 2007: Sydney, Australia http://lca2007.linux.org.au/ "Do you know what [television news ownership] means to me? It gives me the political muscle I need." - Kerry Packer -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
Rev Simon Rumble wrote: >Hi folks. > >I'm about to start contracting and it seems it's a lot more efficient to >have things wrapped into a company. I've been looking around and seeing >stuff about the "80/20 rule" and the like, which determines whether you >can apply company tax instead of personal income tax, and other stuff. > >So does anyone out there have any (IANAA) advice on such things? Any >recommendations of accountants to get advice from? Ideally accountants >who can deal with free-software ledger systems... > >Oh and yes, those of you wondering, I'm back in Sydney. Do give a contrary point of view to a few others, I think doing the company typically _is_ worthwhile, overall. If you shop around for accountants and are willing to do most of the book-keeping stuff yourself, costs can be kept pretty modest in my experience - I pay < $1000 pa all up for accounting and company fees etc. On the benefits side you get limited liability protection, and if you do have multiple clients (or can stay on the right side of the ATO via the various 80/20 type tests) then you can retain earnings in the company taxed at 30% max. That's not as big a deal as it was before the last round of tax threshold changes, but it still can be useful, depending on how much money you make. As others have mentioned, super is an issue as well, but I actually like the control DIY-super allows, for all the costs and admin overheads. Lots of trade-offs, of course, but I'm very happy as a P/L. Cheers, Gavin -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
[SLUG] Re: Java and Firefox on eBay
Hi Oscar and Martin, Now how's this for an interesting turn-up? I checked in Konqueror and Java wasn't working. So I changed the plug-in settings to search the folder with my Firefox plug-ins. Java worked right-away in Konqueror on the eBay site! Still wasn't working in Firefox! (I tried Oscar's suggestion of copying or linking: libjavaplugin_oji.so to my F'fox plug-ins... this crippled Java in Firefox. So I checked the F'fox settings and Javascript was enabled. No help there. Then I checked my other options Firefox > Edit > Preferences > Content > Fonts and Colours > Advanced and ticked: allow page to use their own fonts. Then back to eBay. Now it works! I can't say I really understand *why* this works, but it did. Thanks for helping me to keep "plugging" away at this :) Regards, Patrick -- Registered Linux User 368634 -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
[SLUG] Re: Java and Firefox on eBay
elliott-brennan wrote: Hi Oscar and Martin, Now how's this for an interesting turn-up? I checked in Konqueror and Java wasn't working. So I changed the plug-in settings to search the folder with my Firefox plug-ins. Java worked right-away in Konqueror on the eBay site! Still wasn't working in Firefox! (I tried Oscar's suggestion of copying or linking: libjavaplugin_oji.so to my F'fox plug-ins... this crippled Java in Firefox. It's probably because I have Fedora Core 5 as I disclosed in our Off List email and you mentioned you have Ubuntu. My eBay image upload has always been working in Fedora Core 5. So I checked the F'fox settings and Javascript was enabled. No help there. Then I checked my other options Firefox > Edit > Preferences > Content > Fonts and Colours > Advanced and ticked: allow page to use their own fonts. Then back to eBay. Now it works! I can't say I really understand *why* this works, but it did. O Plameras -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
On Thu, 21 Sep 2006 18:25:10 +1000
DaZZa <[EMAIL PROTECTED]> wrote:
> On 9/21/06, Rev Simon Rumble <[EMAIL PROTECTED]> wrote:
> > Hi folks.
> >
> > I'm about to start contracting and it seems it's a lot more
> > efficient to have things wrapped into a company. I've been looking
> > around and seeing stuff about the "80/20 rule" and the like, which
> > determines whether you can apply company tax instead of personal
> > income tax, and other stuff.
> >
> > So does anyone out there have any (IANAA) advice on such things?
> > Any recommendations of accountants to get advice from? Ideally
> > accountants who can deal with free-software ledger systems...
>
> IANAA, but I've been there.
>
>
> There are advantages - you can buy a lot of "business related" stuff
> and pay for it pre-tax - saving you loads in tax - but you have to be
> careful that the stuff is related to the industry you're in, or
> genuinely necessary for your business. Again - talk to an accountant
> about stuff you can do - for example, if you work from home, determine
> a percentage of your rent/mortgage that is used by your business
> {space, time, electricity etc} and pay for that from the business,
> pre-tax.
Caution on claiming the home office - It may mean that a part of your
home will be subject to capital gains when you decide to sell.
Talk to an accountant :-)
>
> Did I mention you should talk to an accountant? :-)
>
> OK, enough off-topic wafle. Talk to an accountant, OK?
>
> DaZZa
> --
> SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/
> Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
>
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Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
Hi all Jeff wrote: Not sure it's worth it for a small operation (sole trader or partners); you can just get an ABN and get going. Jeff gives good advice. Look at setting up as a Sole Trader initially and later moving to a company if your turnover justifies it. Being a Sole Trader means you have an ABN, a Registered name for the Business and thus other companies, suppliers, and clients look upon you more favorably than if your an individual. I have found that you are treated just like you represent a company if you are a Sole Trader. And Sole Trader will only cost about $200 for the Business name, rego setup. (My business Speleonics http://www.speleonics.com.au/business/ is a Sole Trader.) Mike -- Michael Lake Computational Research Support Unit Science Faculty, UTS Ph: 9514 2238 -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
> (My business Speleonics http://www.speleonics.com.au/business/ is a Sole > Trader.) I *knew* all that cave-diving was aimed at something. Never thought it would be trafficking souls to the dark lord. - Jeff -- linux.conf.au 2007: Sydney, Australia http://lca2007.linux.org.au/ Perl - The Movie Starring 'Weird' Al Yankovic -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
To throw in my situation, I'm a Pty Ltd contractor/consultant. It costs me $2,000 (although increasing now as I do more things) a year to keep the company going, but the cleanliness of the seperation between personal and company is something I find refreshing. As I see it, there's a couple of clear situations. If you think you will end up with a product of some sort in the process of your contracting/consulting and you ever want to sell out, you need a company, as early as possible (to keep intellectual property stuff clear). If you think that you are going to end up hiring subcontractors or staff (if you move more into the consulting/development direction that just straight labour hire) you probably want a company too, just for the accounting cleanliness. Other than that, if the $2000 a year doesn't matter much, then you can go either way. If $2000 a year matters a lot, then don't go for a company. Either way, you can delay it if you want to and switch later, unless you go the product/selling-the-business route. Adam K Rev Simon Rumble wrote: Hi folks. I'm about to start contracting and it seems it's a lot more efficient to have things wrapped into a company. I've been looking around and seeing stuff about the "80/20 rule" and the like, which determines whether you can apply company tax instead of personal income tax, and other stuff. So does anyone out there have any (IANAA) advice on such things? Any recommendations of accountants to get advice from? Ideally accountants who can deal with free-software ledger systems... Oh and yes, those of you wondering, I'm back in Sydney. -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
If you think that you are going to end up hiring subcontractors or staff (if you move more into the consulting/development direction that just straight labour hire) you probably want a company too, just for the accounting cleanliness. Ook! That should read "consulting/development direction, rather than just straight labour hire". Adam K -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
Interesting discussion. One thing I'd like to add is that you might want to inquire of your potential customers about their requirement for you to hold insurance. Some governments require that you hold a significant amount (from memory, enough insurance for a $20m claim) and this was a major expense for someone I know who runs a small management consultancy. My experience is that the contractors who do the same work as I do are significantly better off than I am. I'm not sure if that's because companies expect to pay contractors more or if the financial arrangements are superior. Where they seem to be slightly worse off than me is in the superannuation. The industry super schemes seem to be a lot, lot better. So it might be worthwhile checking if you can contract but still contribute to a industry scheme. I originally chose to be an employee as I had a young family and wanted a more secure job. With WorkChoices I doubt that my job security is any greater than that of a contractor. What I would look out for is recruiting firms. I had one that placed me once, into a job I wasn't particularly suited to. They took 15% from the employer for that. Some time after I was chatting with them and they said "oh, if we'd known you were a networking person we could have got you a lot more" -- ie, they hadn't even read my CV for their 15% and they were really working for the employer, not for me. -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
What I would look out for is recruiting firms. I had one that placed me once, into a job I wasn't particularly suited to. They took 15% from the employer for that. Some time after I was chatting with them and they said "oh, if we'd known you were a networking person we could have got you a lot more" -- ie, they hadn't even read my CV for their 15% and they were really working for the employer, not for me. One of the Perl maintainers did an analysis of this situation a few years ago. His conclusion was that their intrinsic interests don't belong with either party. They don't work for the companies, and they don't work for the people they find jobs for. The remuneration structure of the industry means they work only for themselves, and the situation is set up for them to abuse both sides and use every trick they can to do so. Adam K -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
This one time, at band camp, Glen Turner wrote: > Some governments require that you hold a significant amount > (from memory, enough insurance for a $20m claim) and this > was a major expense for someone I know who runs a small > management consultancy. I think everyone in NSW has this requirement. > My experience is that the contractors who do the same work > as I do are significantly better off than I am. I'm not > sure if that's because companies expect to pay contractors > more or if the financial arrangements are superior. Contractors get paid much better because they don't get paid sick leave, holidays etc. They also have less job security: they can normally be sacked with a day's notice. The flexibility the employer gets is something they pay for. When times are tough, you will have noticed that it's the contractors who go first. That said, I've worked in places where they've had crazy jobs being done by contractors. Things like project managers, which just seems like lunacy to me! Then again, the best project manager I ever worked for was a contractor! > Where they seem to be slightly worse off than me is in the > superannuation. The industry super schemes seem to be a lot, > lot better. So it might be worthwhile checking if you can > contract but still contribute to a industry scheme. I've noticed that a lot of the "industry" super schemes seem to be open to anyone anyway, so I'm not sure this is such an issue. You're posting from a .edu.au account though, and I believe they have an industry-only super fund that is quite good. Equally, government jobs tend to have good schemes. And if you great super, run for election! > I originally chose to be an employee as I had a young family > and wanted a more secure job. With WorkChoices I doubt that > my job security is any greater than that of a contractor. You will at least get more notice in a permanent job. What's more, companies do actually care about morale and sacking permies is a good way to kill it. Smart companies know that when this happens, all the best people start looking for other jobs and they're left with the ones who aren't particularly employable. > What I would look out for is recruiting firms. I had one that > placed me once, into a job I wasn't particularly suited to. > They took 15% from the employer for that. Some time after I > was chatting with them and they said "oh, if we'd known you > were a networking person we could have got you a lot more" -- > ie, they hadn't even read my CV for their 15% and they were > really working for the employer, not for me. Yeah they're know-nothing leeches. At least some companies in Australia advertise direct. In the UK it's much rarer and you end up having to deal through recruit-scum. Company HR departments are just as bad: they'll have a list of skills and if your CV doesn't explicitely say you have it, you don't get to the person who's actually looking to hire. I'm a professional technical writer and have been asked to put tools like Word and Visio on my CV. My response to this is to ask if I also need to put "pen", "paper" and "dictionary research" on my CV. Financial industry recruiters are the worst. Unless you've worked in exactly the job they're recruiting, they won't put you forward. There's a (very interesting) stock market job being advertised right now, but unless you've worked for a stock market (and my, aren't there a lot of those around for you to have worked with) you won't be considered. At least finance jobs pay well, so I guess they can afford to be picky. I've already had one recruiter here who asked if I had the right to work in Australia. Something answered on, oh, line 3 of my resume. She had my resume already. http://www.rumble.net/resume/ -- Rev Simon Rumble <[EMAIL PROTECTED]> www.rumble.net The Tourist Engineer Just because you're on holiday, doesn't mean you're not a geek. http://engineer.openguides.org/ "Put it before them briefly so they will read it, clearly so they will appreciate it, picturesquely so they will remember it and, above all, accurately so they will be guided by its light." - Joseph Pulitzer, the man who presided over the tabloidisation of newspapers in North America. -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] PCI Wireless Card
Scott Waller (Lots of Watts) wrote: Thanks tuxta, went and bought a Gigabit card yesterday, downloaded madwifi, built it, and it works. Was able to connect to an open AP and ssh into a box. tuxta2 wrote: Scott Waller (Lots of Watts) wrote: Hi everyone, I am embarking on a project that requires the use of WiFi. My question is: What PCI WiFi cards work in linux? or what cards have people used successfully? Get one with an Atheros chipset and you'll be fine Tuxta Thats awesome, glad to hear. What distro and version are you using? The reason I ask, is that its been quite some time since I have actually had to download madwifi! Cards with atheros chips just work in Dapper, out of the box. Interesting. Tuxta -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
Re: [SLUG] Contracting stuff: wrap it into a company or PAYE through agency?
On 9/22/06, Rev Simon Rumble <[EMAIL PROTECTED]> wrote: I've noticed that a lot of the "industry" super schemes seem to be open to anyone anyway, so I'm not sure this is such an issue. You're posting from a .edu.au account though, and I believe they have an industry-only super fund that is quite good. Equally, government jobs tend to have good schemes. And if you great super, run for election! I've just started a Pty Ltd for contracting, and will be using Unisuper. It helps that I was a member years ago when I was working for universities. I don't know if Unisuper will take somebody off the street who's not yet a member, though. I'm guessing at least some of the industry funds will. -- Christopher -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
