A quick non boating question....if I may

[wheels 544]

For those that are working for themselves, do any of you have any idea of what you have to earn, to be equal to what a wage would be equal to if you worked for someone else.
In otherwords, when we work for ourselves, we have a higher tax rate, provisional tax, ACC, Insurance and Accountant costs.
I will leave out the cost of Rent and Insurance ob a building as that is too open ended,

 

[Jon 407]

At a guess I’d say at least 20% more, maybe even 25%

However you can put a percentage of your household costs as businesses expenses if you have a good accountant, but that’s another expense

Maybe it’s 30 but should really be 50% more as you also need to factor in holidays

[jim s 34]

as a self employed contractor you need to be payed around 30 to 35% more than a wage earner to end up the same at the end of the year (holidays,the odd sick day stats acc levies cost of accountancy etc). There will be a bit of a variation if the wage earner is regularly on penal rates.I have a spreadsheet that shows the costs and comparisons of being self employed (albeit 10 years old) that i can pm to you if you like wheels.There is a lot of bigger picture stuff involved too like whether you are looking at a short or long term prospect and even how much it would cost to get to work, and if you like record keeping and paperwork...

[Island Time 1,288]

I reckon 35-50% wheels. Costs of compliance now are more than they used to be.... and rising.

[chariot 244]

Anything less than 50% why would you bother.

[Luigi Vercotti 7]

As a contract engineer, the going rate used to be double the staff hourly rate. That's slipped a little but 150% would be my "giz a job"* point.

* Acknowledgement to Alan Bleasdale.

[wheels 544]

Thanks guys. Those figures are about spot on to what I was thinking. I was trying to argue this with a guy and told him that if he is currently earning say $50K on wages and wants to keep that kind of income while working for yourself, you need to earn about $100K. I also said that if he was not earning $80K, he may as well go work for minimum wage for someone. He is currently setting his max earning at $60K because he doesn't want the hassle of GST. I told him he is wasting his time.

I also told him that yr 2 is the real killer for most newbies because if you did well in year 1, you will have provisional tax kick in in yr2 and often a large tax bill to pay if you haven't set aside money for tax. It is not easy these days, as all you self employed already know.

[harrytom 689]

in the industry I am in(trucking)I do not get why you would want to be an owner driver with all the expenses.When a wage/company driver can earn $80k  easily + holidays ,time n half on stat days + sick days  and dont care about the gear they driving.

[El Toro 110]

I wish drivers would care about the gear they were driving......the longer it lasts, the more I can pay them.....

[harrytom 689]

I wish drivers would care about the gear they were driving......the longer it lasts, the more I can pay them.....

exactly our temps do not care,luckily now I have my own dedicated daf+trailer,the hours I work it cannat be used by anyelse but when on holiday it comes back a pig sty.

[Above-the-Fold 15]

Doesn't it depend on what profession you are in?

 

When I went freelance after years on staff at a newspaper, I never again reached the the same absolute dollar amount. But my net income, after various deductions, was not much different from my wife's, who stayed at the paper. Depended on how much I worked, of course. And it was in Canada, so it might not apply directly; dunno what the tax laws are like here, but I got a few breaks.

[wheels 544]

I don't know what requirements are in Canada, so I can't compare. The difference in what you do for income is affected in the area's of ACC payment and liability Insurance. The ability to claim expenses may seem like you are getting more in the hand, but remember that claiming only means you have spent it in some other way and the amount claimed is only the taxable amount.
     Years ago, an opposition to us had sold a customer a 1000m coil of line. The Customer came back to us to tell us he had gone for the opposition because the Guy had sold it to him at cost less GST, because the seller had said he can claim the GST back. We figured all we had to do was wait and the opposition would soon be gone. And they soon were.

[Deep Purple 530]

Mathematically you have to earn the same in 45 weeks as you do in 52 on wages so that is 16%. Add on employer ACC, variable, but say $1500 and an accountant if needed $600 and the increase based on $60000pa/40hrs takes it up to about 20% more.

 

But you may be able to claim some expenses that you have anyway, MVE, phone, use of home etc and if you can split the income with a non earning spouse then the savings are significant but be aware ACC limitations.

 

And the self employed pay tax at the same rate as employees and there should be no concerns about tax. Provisional tax is just self assessed PAYE. With planning, taxation should not cause any concern. You know how much tax you are going to pay, to get to 2 years down the track and have nothing set aside just means you're and idiot as opposed to the system failing