Ben Donohue wrote:
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.
Being sued is a risk but it depends on what you're doing. If you're
just writing web scripts for a tiny company or something, there's not
much they can sue you for. It gets interesting when you put yourself in
a position where you could potentially destroy valuable data, bring down
income-generating live systems etc. Also, simply by earning plenty of
money you place yourself at rick of being sued, because you have money.
Remember that lawsuits generally happen because the person suing wants
to scam money out of the person being sued, rather than because a wrong
needs to be righted.
You can take out insurance (professional indemnity and public liability
are the common ones, AIUI) and this will protect you from most things.
If you work under a limited company then you are personally protected
from MOST things you would otherwise not be protected from as an
unlimited (sole trader/partnership etc) company, but you might want to
take out insurance under your company name anyway to protect *it*.
Talk to an insurance broker, they can give you the details if you're
interested. The figures vary, but for example I asked for a quote on PI
and PL for what is essentially selling my own time as a
developer/sysadmin and it came to roughly $200/month. I have a number
for at least one insurance broker, let me know if you want it.
Um, so yeah, sometimes setting up a Pty Ltd can be simpler :)
But there are other advantages. For example you can set up a bank
account under the company's name. Can't do that under a sole trader.
I'm sure there are other little things that I don't know about too.
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.
Are you trying to claim rent or electricity, for example? The 80/20
rule just means there are certain things you can't claim and other
benefits you don't get. And there are other rules which give you the
same benefits anyway. I'm sure there is a way to start a Pty Ltd
company and work without payment for 12 months or more. Many companies
start without making money as soon as they start :)
But, IANAL and IANAA, yadda yadda yadda :)
Mick.
--
SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/
Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
