"Not to mention that you will pay tax at the buisiness rate (30%) rather than the personal rate based on income (probably 33-39%). "
This what I thought, I went to see an accountant, who told me that although the "business" can pay a 30% rate, that money stays in the business account. If I get paid a salary from the business, I have to pay the usual individual tax brackets, and If I get dividends, then I have to pay the difference between what the company has paid, and what I should pay as an individual earner. Long story short, she told me if I want to have over 80,000 in my bank account (where I can spend it) this year, I am going to have to pay a higher tax rate than 30% on a lot of it. Am I/her incorrect here, I would like to have 30% as a ceiling, this is why I sought professional advice, to find a way. On Apr 16, 1:05 pm, "Aaron Cooper" <[email protected]> wrote: > Already touched on by David, but do spend time considering the tax benefits > of such a move. > > As a contracter, you will be able to claim expenses such as commuting to > work, laptops, PC's and internet connection at home, as well as > rent/mortgage and home office expenses if you do work from home. Not to > mention that you will pay tax at the buisiness rate (30%) rather than the > personal rate based on income (probably 33-39%). > > There's a minefield of things that you can and cannot get these benefits > from, and it all depends on your individual situation. This is something > that only your accountant should give you advice on. Yes they aren't cheap, > but you often get a return on their advice in the long term. > > I reccommend this book if you want a basic grasp of some of the benefits > available to you, and different entity structures. Short and proper english. > You'll get through it in less than a week and it has helped me understand > things I would otherwise have to bounce of my accountant, keeping my costs > down.http://www.goodreturns.co.nz/books/product_info.php?products_id=200. > One word of advice for accountants - keep your discussions with them to the > point and on track. Mine often likes to discuss our mutual interest in cars > while the clock is ticking. > > And they should be paying you in a way that covers their savings in not > covering your holiday pay, sickness leave, PAYE, ACC and student loan. > Because you will basically be covering these costs yourself without direct > cost to your employer at the time of issue. Your in-hand pay will increase > alot, so a bit of forward planning and self control is required so you are > not short in covering these costs. Not too sure about Kiwisaver but worth > noting. > > Take a look at this article and research that > site.http://www.business.govt.nz/Employing-staff/Employment-agreements/Wha... > > All worth considering, alongside the potential pitfalls involved on the > employment side of things that Jochen, Paul and Michael have rasied. > > Don't jump into it. I would tell your employer you need time to investigate > what the situation would mean to you before giving them an answer. Also > think about the possible reasons for why they are proposing this. > > Cheers > Aaron > > ----- Original Message ----- > From: <[email protected]> > To: "NZ PHP Users Group" <[email protected]> > Sent: Thursday, April 16, 2009 12:11 PM > Subject: [phpug] Full time employee to fixed contractor > > > Hi all, > > > My employer proposes me change to change my position from full time > > employee to fixed contractor. He says > > >> While nothing will change in terms of the relationships we have, it's > >> simply a change in terminology and the way you earn money. > > > Meaning nothing will change except they won't take away PAYE but I > > have to register for GST and file for GST every 2 months. > > > In summary, I can take home more money since I don't have to pay PAYE, > > but I have to hire an accountant to do my financial stuff or do it > > myself. > > > What do you think? --~--~---------~--~----~------------~-------~--~----~ NZ PHP Users Group: http://groups.google.com/group/nzphpug To post, send email to [email protected] To unsubscribe, send email to [email protected] -~----------~----~----~----~------~----~------~--~---
