How to set yourself up as a Freelancer in New Zealand 21.07.2015 : 14:38pm
from the abc’s to GST.
Woohoo you’re guna get your freelance on
Becoming a freelancer is super, super simple.
In fact, anyone can do it. Not to say that anyone should, but you get the gist.
Basically, to become a freelancer you don’t
necessarily have to do a thing. Get in! There are however some decisions to be
made and some bits and pieces you need to think about. For most it’s quick and
So here they are:
The type of
company you want to run.
There a few different types of company setups
that you can choose between, like a limited company, a partnership, sole
traders etc. And without getting too complicated, they all provide different
levels of liability and protection. However, nine times out of ten, freelancers
will start out as sole traders – meaning it’s all based around you. You are the
business and you are responsible for every last bit of it.
:-)You get to
keep all the money, honey. Everything you earn ends up in your back pocket. And
so it should.
have to pay anything to set up your company and you don’t have to necessarily
tell anyone like the government etc. You just make sure you pay your tax
return at the end of the financial year.
:-/ If anything
goes wrong you can’t just run away and hide in the corner, you have to front up
as you are personally responsible for any debts. Don’t freak out, you’ll be
Tax, GST and
all the boring bits.
As a freelancer you still have to pay tax and
a few other fees along the way. Here’s a few that you will definitely need to
take note of:
Tax. Pay the man.
You are never going to get away from it (except if you siphon it off somewhere
overseas, but that’s not cool, or probably that legal). Anyway, depending on
what company setup you choose, you will be taxed differently – sole traders are
taxed at individual rates. Regardless, just be aware of what your rate will be,
when your financial year will start and finish for your tax returns (most are
April to March), and once your first year is done, whether you have to pay provisional
tax. But do not fear an accountant can help you with all of this.
GST. This may be
optional for you, it depends on whether you earn above $60K or not. But if you
opt in, there are some little things you have to do to please the tax man:
you highlight your GST number on your invoice
and highlight it on your invoice
tax returns on time.
employees forget that ACC levies are covered when they are employed. Not
anymore. Bugger. You will be sent an ACC levy bill at the end of each financial
year and it is based off your income the previous year. So all you really have
to do is remember to put a little aside for it, so you don’t get stung.
Kiwisaver. You may be
young and fancy free at the moment, especially now you’re living the sweet
freelance life. But not too long in the future and you’ll want to retire,
recline back in your armchair and watch the Living Channel on repeat. So make
sure you can pay for it. You no longer have a percentage of your income getting
paid into your Kiwisaver, account, nor will you have your employer matching it,
so save, save, save. Yes, we know we sound like your parents now.
Well done, you’re not asleep after all of
this. But you may have a few questions. So get in touch with a professional, maybe
an accountant or you could ring the IRD – they love talking about this stuff. Good luck!