atw: Re: Umbrella companies - long - maybe OT for you
- From: "Kevin Williamson" <kevin.williamson@xxxxxxxxxxxxxxx>
- To: <austechwriter@xxxxxxxxxxxxx>
- Date: Thu, 9 Jun 2005 13:18:33 +1000
I have to agree with Warren's comments. There is a high degree of
independence in working as your own business and controlling your own
destiny. Warren your comments on the use of accountant is vitally
important in this regard. I 'sacked' quite a few before I stumbled
across the one that I am using now. He has effectively changed the ball
game for me and has reduced the amount of tax that I pay quite
considerably.
The only downside with this the organisations that you contract to. I
had to create a company out of necessity (as opposed to being a Sole
Trader with a simple ABN), as I complete a fair amount of work for
governments. While some departments (Commonwealth) are happy to pay
direct to a Sole Trader, the ones that I complete most of my work for
will only deal with a Company. This invokes additional administration
and $. There is company tax to be paid, along with insurances and ASIC
returns. While the insurances are still able to be paid as a Sole
Trader, this is additional expenses as a company, especially if you have
employees working for you (which I only do where absolutely necessary).
In the main, if you can stick to being a Sole Trader you are better off.
One advantage is that you can park all your money against your mortgage
(offset account) and effectively pay off the house ahead of time.
Obviously, you still need to pay GST, PAYG at the appropriate times, but
it sure helps. As a company, there is no flexibility with this.
Cheers,
Kevin Williamson
Kevin.williamson@xxxxxxxxxxxxxx
-----Original Message-----
From: austechwriter-bounce@xxxxxxxxxxxxx
[mailto:austechwriter-bounce@xxxxxxxxxxxxx] On Behalf Of
warren.lewington@xxxxxxxxx
Sent: Thursday, 9 June 2005 11:44 AM
To: austechwriter@xxxxxxxxxxxxx
Subject: atw: Re: Umbrella companies - long - maybe OT for you
I have had my own business for years. It is not that onerous. It brings
a
sense of pride. YOU, have a shingle above YOUR door.
If your accountant doesn't make up the difference in their extra charges
by finding new ways of claiming deductions for you that gives you more
money in the hand and a better lifestyle, find another accountant. And a
good accountant will always be happy to take your call and talk about
improving your business, as it is good for them! Admittedly my
accountant
is the same one my parents used, a real advantage. A management company
doing your tax for you is stupidity, they won't be bothered about
crossing
"t's" or dotting "i's"; because to make it work for them they have to do
it to the lowest common denominator. So what to them if you are eligible
for govt family deductions or whatnot? They'll simply pump some vague
numbers into their template, punch out a report, log that into the ATO
and
move on to the next "valued" client.
Doing a BAS quarterly is the BEST way of really finding how much you
spend
versus earn, and whether it is all worthwhile. Best of all, you can set
goals about turnover and have fun trying to achieve them. Create a fancy
excel spreadsheet and a couple of input forms and 'voile', your BAS is
done, and you are professionally tracking how you are doing. Doing your
BAS is the best 16 hours per year you will do in business. Pay as you go
tax means you have to sensibly put away some money. And it can catch
you,
I caught myself out this year and for a while paid over 50 cents in the
dollar. Now I'll get that back. But I'll have to wait. Also, if you do
the
right thing by half, the ATO are really good to deal with, they are not
the ogres they once were. You will gain out of the increased amount of
deductions. Your tax could conceivably drop to zero in some cases. Not
bad
for a low to middle income earner.
Frankly, management companies don't do diddly squat for the money, and
you
have added a layer that is unnecessary. Ultimately you should negotiate
into the rate with the company enough to cover the costs of the "extra"
paperwork. I would be working on 7 to 12% depending on your current
turnover which could be a bit excessive if you are on an hourly rate.
Bear
in mind, recruitment agents charge that and more.
The down side is finding new work, and I have struggled with that for a
long time. However, if your client is guaranteeing (bearing in mind
there
are never cast iron guarantees) work for a long time, go for it.
The insurances are a little bit tricky, and I can give you a name to
contact about that. But ultimately, once you have found the independent
help you need, pay them and let them do it for you, while you
concentrate
on doing what you do best, technical communication.
There is no room today in any industry for sentimentality. It is
unprofessional and won't change anything. If you can't handle things the
way they are; retire. Let someone who can do it, do it.
Warren Lewington
Technical Writer
Metso Minerals
Arndell Park, Sydney.
NSW, Australia.
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