Sole trader/sub contractor help needed.

OK, help needed here for a newbie.:-

Basically my working life up until now I have been an employee and have always had tax/super/workcover taken care of by the employer.

I am now going to be working for myself as well as doing work for a company in a factory as a sub contractor(as a labourer:rolleyes:), possibly a few months at a time at the one place.

So what is the best way to set my self up? Or what is the bare minimum I need to do to start working as a sub-contractor for a company?

After a brief read at Business Victoria website, I'm guessing I need to set up as a Sole Trader and get an ABN? Guess I can also find out tax & super info from the ATO website.

Ive got lots more questions:C , but I will see what info anyone has from here, cheers.

Bare minimum is an Abn.

Al :)

Don't foget the insurance.:doh:

Check out a few associations that represent the type of work you intend to do.

Unions can also be a source of info but you usually have to join.:rolleyes:

State gov web sites are another place to look.

G'day Matrix, when I was in your situation about 6 years ago my accountant recommended setting up a shelf company and a family trust with the business being trustee for the family trust. Good idea to speak to your accountant or someone who understands this system cos I can't remember all the details now. You have to pay a fee to ASIC each year but your private assets are safe. I'd advise having public liability insurance too.

CHeers
Michael

All depends on how much you are going to be earning in a year.

Get an ABN for sure.

Also get Workcover (what we call it in Qld) & Public liability insurance.

Register for GST if you are going to earn more than $50K/annum.

Only go into companies & trusts if you are into bigger money & you can split some of it with your spouse. (bookkeeper, storeman, boxpacker,:wink: :wink: )

You have to get an abn no matter what, thats the law if you are carrying out any business activity.I would go sole trader. its much simpler.

Besides the ABN don't even consider contract work without accident insurance and public liability insurance. It's a cold hard litigious world out there and you don't want to lose everything you own.

Mick

I'd agree with the others - just get an ABN for starters and set up as a sole trader - this is a minimal set up and you don't need to set up a company. Later, if you are earning fair dollars and this looks like it will work for you and you like working for yourself (not everyone does), then you can set up the company/trust thing if you want.

If you do go down the company/trust route, I would advise getting a good accountant to give you some advice. And I stress the 'good' part - some accountants don't seem to know a lot about this stuff.

Martrix,
don't go too cheap with your pricing!
Coming from working on wages, anything might seem like good money, but remember what you will be getting from now on is all you will be getting. Whatever your hourly rate was on wages I'd say double it. At least.

As soon as you start working for yourself you have heaps more bills to pay.
Just off the top of my head you will have to pay for
Insurance, super, extra accountancy, vehicle expenses, tools, holiday pay, more bank fees etc.etc.

There is heaps of small business help out there. Get as much advise as you can.

Regards
Bill

Billbee is dead on the money.

5yrs ago I would't get out of bed for less than $40 per hr.

Although all expenses can be a tax deduction, remember, you have to make it before you can deduct it.

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Originally Posted by mic-d

G'day Rat, when I was in your situation about 6 years ago my accountant recommended setting up a shelf company and a family trust with the business being trustee for the family trust. Good idea to speak to your accountant or someone who understands this system cos I can't remember all the details now. You have to pay a fee to ASIC each year but your private assets are safe. I'd advise having public liability insurance too.

CHeers
Michael

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This is the advice I'd run with Martrix. You need to run your individual particulars past an accountant so that he or she can advise you and do your tax and so on. Good luck with it.

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Originally Posted by martrix

I am now going to be working for myself

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The first question you must answer is are your activities likely to incur any liabilities if you did do something wrong, could you be sued for damages, will you be borrowing from creditors etc.

If the answer is a definite no then the simple advices gioven MAY be adequate, but not if circumstance change in the future and it is cheaper and easier to now plan for the futue.

If the answer is possibly, than you must consider the possibility of your assets being lost (your house, car and workshop tools etc) and seized if you go broke. If so, you should consider incorporating yourself into a company and possibly a trust. Whilst it is not the cheapest option it's the safest option.

Hence obtain good advice from a good accountant and let him set up the structure that is appropriate for your current and future needs.

Having been involved with a number of cases where the client did get into trouble and was able to walk away with all his assets in tact, and knowing one who did not do so and lose his house, I can not stress this aspect of business planning enough from the beginning.

Sure a sole trader and ABN will get you started but you would be ill advised to do so.


Peter.

Thanks for all of the good advice. The ABN was pretty easy to get and only took about 30min online. Now Ive gotta think of a name.:rolleyes: Have been thinking of a name for a long time, but every time I come up with something I like it has already been registered and the domain name taken.:~ Going to have to start thinking wildly obscure which I thought I already was.:?

To start with I will only being doing joinery assembly as part of a team in a Shopfitting factory so I am not sure if or how much Public Liability insurance I need, but I will look in to it before I start.

Can anyone recommend some company's for this purpose?

As for bookkeeping I know I don't really need an Accounting program, but I want to learn how to use one so I can improve my financial skills which up until now have been, umm not golden.:-

So I have been playing with trial versions of Quickbooks and MYOB. Quickbooks has the votes so far and the interface seems a little easier for the accounting challenged:D , so if anyone has some opinions as to the pros/cons of either programs (or another one) I would appreciate your thoughts, cheers.

PS. any links to sites that could help with Business terminology/running tips for a newb would also be good.

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Originally Posted by martrix

So I have been playing with trial versions of Quickbooks and MYOB. Quickbooks has the votes so far

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I tried both before going for QB, I wouldnt say its easy, but its easier than MYOB. :-

Al :)

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Originally Posted by martrix

I am not sure if or how much Public Liability insurance I need, but I will look in to it before I start.

Can anyone recommend some company's for this purpose?

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I have public liability through Elders. They have been good to me, but haven't needed a claim yet. When I recently increased my limit from 5M to 10M, the new premium turned out to be less than I was paying before!

Cheers
Michael

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Originally Posted by martrix

..............To start with I will only being doing joinery assembly as part of a team in a Shopfitting factory so I am not sure if or how much Public Liability insurance I need, but I will look in to it before I start.................

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You'll still need public liability, what if you (perish the thought) nail someone's hand or eye with a nail gun, or knock over a partly assembled unit full of glass and mirrors etc? I believe that entry level public liability insurance starts with $5M cover.

Re the book-keeping software, I use QBs and, even though I'm a computer novice and no accountant I've helped a few friends set up their sole trader/partnership book-keeping on QB.

Mick

A company set up as a trustee for your family trust could be another option. It depends on whether you have offspring to distribute income to. If you do, and they are around 16 and still studying, it's a definite advantage.

I have indemnity insurance for 10Mil and it cost around $500 a year. I can put you on to a good insurance broker if you want. I've used the same guy for almost 20 years and he's a good chap. PM me if you want details. He's in outer east Melbourne.

G'day Tim,

You may or may not yet know :shrug: you'll need to register your business name, but when you do you'll need 4 back-ups in case the first choice is already taken etc. Registration costs $70 and is renewed every 4 years.

http://online.justice.vic.gov.au/servlet/cav_home

Keep it simple stay as a sole trader, my 2¢, shelf companies are if you're dodgy - do things by the book and you'll be right. If you'd like, come around and I can help out with anything you need to know.

A word of advcie - set-up two b/accounts: one to pay your own money into and the other to keep the GST and tax in. I've seen too may people think that the GST and tax is theirs and come unstuck come end of f/year and they have spent the GST and tax on their person or the business and have to find the money from elsewhere.

You don't need an accountant, GST and BAS is the easiest thing in the world to keep track of and everything else involved with it. Getting an accountant is just spending money you can very easily keep in your wallet.

Incorporation costs a lot of money and in the first year an accountant will tell you to wait until you're up and running for a year before you incorporate. There are benefits in it, but you get near the same exact benefits as a Sole Trader.

If you're working from home and depending on the nature of the business, you may find that you'll get public liability covered under your home insurance, at least I did with AMMI. Like Gumby said, get professional indemnity insurance, it saves you from what could be costly mistakes - but given your business that may not be needed. When printers print big job worth oodles of money for me - it's a piece of mind.

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Originally Posted by Waldo

, shelf companies etc. are if you're dodgy - do things by the book and you'll be right. I

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absolute bulltish !

Tax minimisation is entirely legal.

Please do not confuse it with tax avoidance or infer that those who take legal steps to get back what they are due are dodgy. :cool:

G'day Gumby,

Perfectly correct, wasn't meaning to infer that. All for minimising tax, just the right way. :2tsup: My gripe is those who owe big money and walk away saying that they're just an employee of their own company and pay 1¢ in the $ they owe. But this is I'd think is a different ballpark to what Matrix may be thinking off.

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Originally Posted by Gumby

Tax minimisation is entirely legal.

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Yes, the definitive case was the House of Lords decision in 1935 in the Queen v the Duke of Westminster where the Law lords held that every taxpayer could organise his affairs in such a lawful way so to pay the least amount of taxes.

This decision is applicable and binding on all Australian courts.

Peter.

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Originally Posted by Waldo

All for minimising tax, just the right way. :2tsup: My gripe is those who owe big money and walk away saying that they're just an employee of their own company and pay 1¢ in the $ they owe. .

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But, still legal if done the right way. The laws of bankruptcy and company legislation are there to protect them.


Peter.

G'day Peter,

For my 2¢ those people have no morals and don't care about their fellow man, only what they can get out of it and if it hurts others then what do they care. CRS Australia is the latest example - unfortuneately I know one of the directors involved. :( :((

Company legislation for my 2¢ is too lenient in favoring business and forgetting about the monetry rights of the employees, by way of superannuation and responsilbility to others etc. but that's way off the topic of one bloke setting up a business. :shrug:

:)

I'm going to bed before I turn Matrix's thread into more than simple questions, sorry mate.

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Originally Posted by martrix

To start with I will only being doing joinery assembly as part of a team in a Shopfitting factory so I am not sure if or how much Public Liability insurance I need, but I will look in to it before I start.

Can anyone recommend some company's for this purpose?

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Pretty much like any insurance ring around or use a broker (I never did this but have plenty of mates who did and thought it was great - no effort on your behalf). I had all my business insurance through SGIO as they gave me a decent discount when I linked it to house and car etc. Also look at what else they offer. I think I had to take out a business insurance package when I did it and it included my workers comp and tool and equipment insurance as well as public liability. They would not break it up. It did cost more but not alot more and piece of mind from having your tools insured is very nice. When I first started out I was just sole trader by myself and did not employ anyone. Even with no employees, some larger businesses required that I show them a certificate of insurance for my PL and WC before stepping foot on site, this was despite the fact that you can not insure yourself for WC, it was just a $300 certificate that allowed me to win the job. When i started to emply guys my WC premium rose substantially and was based on the hours worked by the employees, I use to have to fill out a statement of hours worked and predict the following years when I renewed each year, these costs start getting scarey big.

Do not discount the rise in cost of your mobile phone useage, you don't realise how much you use it when you are working for yourself. Also, one thing i did to make life easier come tax time was get accounts with as many places as I could - less receipts to manage, especially for fuel. I had several gull cards (one for each vehicle, one for my bobcat and one for my small plant) Gull did not charge you anything for the service at the time but i remember some of the others did want to charge a monthly account keeping fee. Also, get a ute if you don't already have one, laws for keeping logs are different with utes and much easier to deal with. These may all seem like little things but when you start spending an hour a night entering receipts into MYOB and keeping logs after a day on the tools you soon find ways to simplify it.

Also registering for GST is based on turnover not earnings so if you turn over $60K but only 20 of that is profit you still need to be registered for Get Shafted Tax. I quite liked being GST registered as it is the client who pays it in the end and you get to get 10% back on all your tools:2tsup: at tax time.

Re your name.

My advice is to pick something that starts with the letter "A" as it heads alphabetical directories and listings and is obviously one of the first names/businesses people usually recognise and remember.

Also keep it under 8 letters. That way it makes an easy name and web address for dummies to remember, and is small enough to maximise advertising space for you $$$$

A bit like MYERS they dropped the "S" and the word MYER became 20% larger for the same space.

I picked Artzania, for furniture that is a bit arty and different hence the zany bit:wink: I get lots of comments mainly from the women and after all they are the important ones as they "pick" the furniture, and the blokes just pay for it:rolleyes: So when you go for names/imaging just remember its the girls you have to get the attention of:)

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Originally Posted by Lignum

Re your name.

My advice is to pick something that starts with the letter "A" as it heads alphabetical directories and listings and is obviously one of the first names/businesses people usually recognise and remember.

Also keep it under 8 letters. That way it makes an easy name and web address for dummies to remember, and is small enough to maximise advertising space for you $$$$

A bit like MYERS they dropped the "S" and the word MYER became 20% larger for the same space.

I picked Artzania, for furniture that is a bit arty and different hence the zany bit:wink: I get lots of comments mainly from the women and after all they are the important ones as they "pick" the furniture, and the blokes just pay for it:rolleyes: So when you go for names/imaging just remember its the girls you have to get the attention of:)

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I think getting the right sound and image from the name is far more important than getting first place in the directory, mine is Greenroom and as a landscaper it works well and always wins over Bazzas Backyard Makeovers with the ladies. Lignum is right, they are the ones you need to impress.

Likewise, get a decent logo, print it on a glossy card, and print quotes on your computer in colour, it gives clients the feeling that they are dealing with a professional. I use to honest to god subcontract a guy who I watched in horror hand a quote to a woman scribbled on the back of an old envelope that had been knocking around on the floor of his filthy ute, needless to say he makes enough money to get by but never gets ahead. Clients don't mind waiting a day for their quote if it stands out and I am not talking price. I use to constantly get shown scrawled out quotes by women who would plead with me to match it. My standard answer was that I hold all my insurances, pay all my taxes and turn up when I say I will so cannot afford to drop my price but feel free to go with the other guy - I never missed out on many jobs and those that I did I was happy not to do. Clients that scrimp from the start are usually pains and always want a Ferarri for a Ford price.

Brings me to my next point, go with your gut when pricing and accepting jobs, if after meeting with a client to cost a job you feel that they need to have the pain in the rear levy added to their price do it - you will inverably earn it, if someone is hard work to win over, don't work for them, never lower your self to bidding for work. It is imperative that you have a good relationship with clients and you are far better off staying at home for a week with no work than working for someone who does not deserve your services - I learnt that the hard way.

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Originally Posted by Burnsy

I think getting the right sound and image from the name is far more important than getting first place in the directory, mine is Greenroom and as a landscaper it works well and always wins over Bazzas Backyard Makeovers with the ladies. .

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Bazzaz Bckyard Makeovers would get my attention before Greenroom because its self explanetory and Greenroom could mean anything. Interior designer springs to mind. Im not saying you have to have a name with A but the higher up in listings the better the chance a potential customer will ring before something starting with Z. Its not the be all and end all, but it dose help. Anyway G is pushing up the )

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Originally Posted by Lignum

Bazzaz Bckyard Makeovers would get my attention before Greenroom because its self explanetory and Greenroom could mean anything. Interior designer springs to mind. Im not saying you have to have a name with A but the higher up in listings the better the chance a potential customer will ring before something starting with Z. Its not the be all and end all, but it dose help. Anyway G is pushing up the )

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I probably should have expanded- full name Greenroom Landscaping :doh:

OK, thanks again for all of the good advice. Still looking for a name that I am happy with to register.

It appears now more than likely that I will have to register for GST as I think I estimate all things going as planned, I will be over the limit.

So I know the downsides of GST are the monthly/quarterly BAS statements, what are the benefits of being registered for GST?

I take it that it works like this. I charge GST on my services to the company. That company then also charges GST to their customer and the company then claims a GST credit on what I charged them?

Any tools, goods and/or services I use for my business I can claim a GST credit on the GST I am charged when purchasing these items, as well as claiming them as a tax deduction?

PS. Gday Waldo, do you use QuickBooks?

G'day Matrix,

No, my method is simpler. I just use the old fashioned invoice book and two Mabrig folders, one for quotes and when those quotes turn into invoices they go back in the same folder until they're paid, when they're paid they go into the paid invoice folder.

Then I take out the GST and tax, put that into one account and the money left over into my bank account.

:shrug: works for me.

Very interesting read. I always thought MYOB was the moist popular small busines software, seems it is a prerequisite to have knowledge of it before gaining employment at a lot of smaller businesses. Now everyone here that owns there own business uses Quickbooks, cos it's easier, more intuitive, and reports better. I use Quickbooks for all the same reasons.

I don't have two bank accounts, seems a waste of money to me, but I do know some people need them to keep track.

Whilst all the advice here is well meant, including mine, it is worth exactly what we have charged you. You NEED specific advice from a proffesional, it will save you money in the long run.