Home – New Forums Starting your journey IT Contracting with ACNABN

  • This topic is empty.
Viewing 15 posts - 1 through 15 (of 30 total)
  • Author
    Posts
  • #990493
    Blknite
    Member
    • Total posts: 43
    Up
    0
    ::

    Hi guys ,

    I recently started contracting and got selected for an IT role at Telstra via a recruitment agency. That agency do not offer PAYG option while contracting , only option is to get an ACN.

    I got an ACN , ABN, registered for GST etc , thats all done.Now my payment structure is like this – My Co will invoice agency , agency to invoice Telstra. Now my questions are ;

    1. Do I need workcover insurance ?
    2. Do I need to register my co. for PAYG
    3. And Shall I show myself as employee of my co. getting paid by PAYG ?
    4. Or Is it OK for me to skip Point 2 and 3 , Just receive the money from agency into my co. account and that’s pretty much it ?
    5. BAS statements – Can I lodge them myself or do i need an accountant ?

    What’s ideal way to maximise tax returns ?

    #1177214
    alliedib
    Member
    • Total posts: 453
    Up
    0
    ::
    Blknite, post: 206401 wrote:
    1. Do I need workcover insurance ?

    Hi Blknite,

    Generally speaking you will. What state are you in?

    Regards,

    Mark

    #1177215
    Blknite
    Member
    • Total posts: 43
    Up
    0
    ::
    alliedib, post: 206421 wrote:
    Hi Blknite,

    Generally speaking you will. What state are you in?

    Regards,

    Mark
    I am in VIC

    #1177216
    alliedib
    Member
    • Total posts: 453
    Up
    0
    ::
    Blknite, post: 206422 wrote:
    I am in VIC

    I would go to the following website and see if you require a policy: http://www.vwa.vic.gov.au/insurance-and-premiums/worksafe-insurance/do-i-need-a-policy . Bear in mind too that Telstra may ask you for a Certificate of Currency for WC (just like PI and Liability) so even though you may not require one by law, you may need to obtain cover just to satisfy Telstra.

    To take out a policy, you need to contact a Workcover agent and arrange cover. The premiums are set by Workcover so all agents charge the same (based on the same information).
    Alternatively you can call an insurance intermediary and they can do it for you (usually on a fee for service basis) – if you need help in finding one PM me and I can refer to you one (I don’t handle Vic WC but I know a firm that does).

    Regards,

    Mark

    #1177217
    Blknite
    Member
    • Total posts: 43
    Up
    0
    ::
    alliedib, post: 206476 wrote:
    I would go to the following website and see if you require a policy: http://www.vwa.vic.gov.au/insurance-and-premiums/worksafe-insurance/do-i-need-a-policy . Bear in mind too that Telstra may ask you for a Certificate of Currency for WC (just like PI and Liability) so even though you may not require one by law, you may need to obtain cover just to satisfy Telstra.

    To take out a policy, you need to contact a Workcover agent and arrange cover. The premiums are set by Workcover so all agents charge the same (based on the same information).
    Alternatively you can call an insurance intermediary and they can do it for you (usually on a fee for service basis) – if you need help in finding one PM me and I can refer to you one (I don’t handle Vic WC but I know a firm that does).

    Regards,

    Mark

    Thanks Mark , this is sorted out now as my agency told me this afternoon that workcover would be provided by them because of 80/20 rule i.e. as my earning are more than 80% from them so they will take care if it.

    Would appreciate if someone can help me other remaining points.

    #1177218
    ThexArm
    Member
    • Total posts: 253
    Up
    0
    ::
    Blknite, post: 206401 wrote:
    1. Do I need workcover insurance ?
    2. Do I need to register my co. for PAYG
    3. And Shall I show myself as employee of my co. getting paid by PAYG ?
    4. Or Is it OK for me to skip Point 2 and 3 , Just receive the money from agency into my co. account and that’s pretty much it ?
    5. BAS statements – Can I lodge them myself or do i need an accountant ?

    Congratulations on your employment!

    You need to consult your accountant to find a tax effective way of doing things. Your agency is paying your company all the money that your earned without deducting any tax so all that money needs to be channeled in a legal way for you to use it. Otherwise you will get into trouble with ATO.

    Whether you want to be an employee of your company or director is also an important consideration that your accountant can advise you. If you want to draw money as an employee then you will need to register your company for PAYG. Accountants can create tax effective scenarios for you. If you have an umemployed spouse or family member that member can be shown as a employee and pay minimum salary so that you total taxable income would be minimum.

    You will need to register for GST since it is a company and collects GST. Your agency pays your fees along with GST. You could also claim GST on certain items you buy as part of your business. You probably be able to lease a car and claim its expenses as part of your business.

    Since there is GST and probably PAYG involved you will definitely need to file BAS returns.

    There is a quite a bit of paperwork involved and all the paperwork needs to be retained for 3 or 5 years in case ATO randomly selects your business for an Audit.

    So, I would strongly suggest getting advise from an accountant.

    #1177219
    Blknite
    Member
    • Total posts: 43
    Up
    0
    ::
    ThexArm, post: 206494 wrote:
    Congratulations on your employment!

    You need to consult your accountant to find a tax effective way of doing things. Your agency is paying your company all the money that your earned without deducting any tax so all that money needs to be channeled in a legal way for you to use it. Otherwise you will get into trouble with ATO.

    Whether you want to be an employee of your company or director is also an important consideration that your accountant can advise you. If you want to draw money as an employee then you will need to register your company for PAYG. Accountants can create tax effective scenarios for you. If you have an umemployed spouse or family member that member can be shown as a employee and pay minimum salary so that you total taxable income would be minimum.

    You will need to register for GST since it is a company and collects GST. Your agency pays your fees along with GST. You could also claim GST on certain items you buy as part of your business. You probably be able to lease a car and claim its expenses as part of your business.

    Since there is GST and probably PAYG involved you will definitely need to file BAS returns.

    There is a quite a bit of paperwork involved and all the paperwork needs to be retained for 3 or 5 years in case ATO randomly selects your business for an Audit.

    So, I would strongly suggest getting advise from an accountant.

    Thanks , appreciate your comments.
    Any suggestions for a decent accountant who can help in Melbourne area ( CBD or Western Suburbs) – TIA.

    #1177220
    alliedib
    Member
    • Total posts: 453
    Up
    0
    ::
    Blknite, post: 206492 wrote:
    my agency told me this afternoon that workcover would be provided by them because of 80/20 rule i.e. as my earning are more than 80% from them so they will take care if it.

    No worries.

    My understanding and experience with Workers Comp is that the ’80/20′ rule (which isn’t really 1 rule – it is a set of tests designed to determine ‘contractor’ v ‘worker’ for workers comp purposes) only applies when the agreement is with a principal and a sole trader.

    If you are a company (which you advised you are in the OP) and you are contracted to another company, then you are considered to be at arms length and cannot rely on the principal’s policy to cover you. This is why a number of organisations will not engage sole traders – it prevents there being any ambiguity about where they are covered in the event of a workplace accident.

    I would suggest that you spend a few minutes on the phone to Workcover and explain your situation to them – you can generally also request a private ruling to ensure that you are correctly classified. As Workers Compensation is a Statutory cover (mandatory under legislation) if you are found to not have a policy in force when required to then you could be liable to substantial fines (and I dare say the person at the agency won’t be paying it – ‘oh I thought you would have gotten specific advice about that, sorry’ would be the reply’). Furthermore, the rate is pretty low so the cost of not having a policy could far outweigh the cost of having one (eg if you fall under Class M70000 – Computer System Design and Related Services – it has a premium of approx $300 for every $100,000 in wages from my research (.254%)).

    As always, happy to clarify or answer any questions you may have.

    Regards,

    Mark

    #1177221
    Blknite
    Member
    • Total posts: 43
    Up
    0
    ::
    alliedib, post: 206497 wrote:
    No worries.

    My understanding and experience with Workers Comp is that the ’80/20′ rule (which isn’t really 1 rule – it is a set of tests designed to determine ‘contractor’ v ‘worker’ for workers comp purposes) only applies when the agreement is with a principal and a sole trader.

    If you are a company (which you advised you are in the OP) and you are contracted to another company, then you are considered to be at arms length and cannot rely on the principal’s policy to cover you. This is why a number of organisations will not engage sole traders – it prevents there being any ambiguity about where they are covered in the event of a workplace accident.

    I would suggest that you spend a few minutes on the phone to Workcover and explain your situation to them – you can generally also request a private ruling to ensure that you are correctly classified. As Workers Compensation is a Statutory cover (mandatory under legislation) if you are found to not have a policy in force when required to then you could be liable to substantial fines (and I dare say the person at the agency won’t be paying it – ‘oh I thought you would have gotten specific advice about that, sorry’ would be the reply’). Furthermore, the rate is pretty low so the cost of not having a policy could far outweigh the cost of having one (eg if you fall under Class M70000 – Computer System Design and Related Services – it has a premium of approx $300 for every $100,000 in wages from my research (.254%)).

    As always, happy to clarify or answer any questions you may have.

    Regards,

    Mark

    Thanks Mark . Good suggestion , I’ll call them 1st thing on Monday morning , better safe than sorry.

    #1177222
    Blknite
    Member
    • Total posts: 43
    Up
    0
    ::

    Just putting it out 1 more time , Would appreciate recommendation for an accountant (Melbourne CBD or Western suburbs) who can help me out with few unresolved things.

    #1177223
    Peter – FS Administrator
    Member
    • Total posts: 1,889
    Up
    0
    ::

    Hi there, I don’t know of a personal referral in Melbourne, but there a lots of Flying Solo members in the area listed in our member directory if that helps with some options.
    All the best with the business.
    Cheers
    Peter

    #1177224
    Blknite
    Member
    • Total posts: 43
    Up
    0
    ::
    FS Administrator, post: 206502 wrote:
    Hi there, I don’t know of a personal referral in Melbourne, but there a lots of Flying Solo members in the area listed in our member directory if that helps with some options.
    All the best with the business.
    Cheers
    Peter

    Thanks Peter , I’ll have a look at that. But would really want to see some one recommended.

    #1177225
    MD Clean
    Participant
    • Total posts: 308
    Up
    0
    ::

    BAS is super easy to do yourself – 10 minutes per quarter.

    My super limited understanding is to register PAYG and your company pays you.

    Obv, seek advice from an accountant.

    #1177226
    TehCamel
    Member
    • Total posts: 873
    Up
    0
    ::
    Blknite, post: 206495 wrote:
    Thanks , appreciate your comments.
    Any suggestions for a decent accountant who can help in Melbourne area ( CBD or Western Suburbs) – TIA.

    Xavier Xi, Axle Edge Accounting Group, Yarraville. Been using him for 3 years now, similar circumstances, IT consultant / Contractor / Service provider.

    #1177227
    Blknite
    Member
    • Total posts: 43
    Up
    0
    ::
    TehCamel, post: 206553 wrote:
    Xavier Xi, Axle Edge Accounting Group, Yarraville. Been using him for 3 years now, similar circumstances, IT consultant / Contractor / Service provider.

    Thanks , I will try to contact him.
    Btw whats ur structure , do u pay urself from ur company accounts ??

Viewing 15 posts - 1 through 15 (of 30 total)
  • You must be logged in to reply to this topic.