72 replies to this topic

[N/A-PWR]

there is a percentage limit to who you work for per year,

 

so make sure you have a couple of places to work for annually. 

[Rockoz]

Percentage limit is for super and workers comp reasons.

A lot of companies put all their workers on subcontract to avoid it.

Concretors and trucking companies are a couple that were big on it.

A lot of it was sole traders dont get workers comp.

A lot of people were getting hurt without adequate cover

[Rockoz]

DJ the way it goes with a lot of sole traders is that they dont bother with super.

Its not compulsory as a sole trader.

And its usually that tight for funds in the early stages the sole trader is trying to find enough money to keep food on the table.

Super is one of the things that tend to get put on the back burner

[Dr Terry]

I would not recommend becoming a sole trader.

 

All your personal assets are at risk.

Skap is correct on his point. ALL your assets are at risk.

 

The best way around it is to establish a Pty Ltd company. The amount of paperwork you go thru to do this is not much more than becoming a sole trader & you are protected.

 

The cheapest way is to purchase a 'shelf company'. They are already set up, ready to go, with some nondescript name like Amce246, but this can be changed. 

 

In the long run a Pty Ltd company is also easier to handle than the sole trader set-up, it's like a separate persona, where you become both the boss & the wage earner.

 

Dr Terry

[wot179]

So what would you suggest, Skap?

[wot179]

Looks like Doc answered first.

 

Cheers.

 

 

Can one of you explain the differences plus anything else that may be pertinent?

 

I don't have an accountant to ask.

[wot179]

Ive been told a pty can be difficult and expensive to get out of as well.

[Rockoz]

There is only one advantage I found with Pty Ltd.

That was being able to work in the mining industry.

It was a requirement.

All directors of a Pty Ltd company will become personally liable anyway.

Most documents you sign will have that as a clause.

There were ways around it such as trusts but those loopholes were closed years ago.

Costs associated with Pty Ltd become more especially with accounting. You can do it yourself as a sole trader.

But if you normally use an accountant their rates will go up significantly.

 

If you decide to do it, there is no need to purchase a shelf company.

You can pick your own name and do it all online in about an hour.

Think it cost me $200 about 6 or 7 years ago.

[yel327]

There is a bit more ongoing cost with PTY Limited but still worth it for asset protection. The only way a Director becomes liable afaik are if you sign something to make you liable (silly to do this), or if you are doing something pretty bad deliberately (negligence). The other is Debt recovery can bypass the Limited Liability in some cases. I set mine up as a PTY Limited solely for the limited liability as I do design work, and whilst I don't stuff things up you never know what legal tricks may happen to screw you. I've often had Companies ask for Proffessional Indemnity Insurance which is fine (like the TAFE) but when I have showed them the figures of the extra hourly cost that 7+ years insurance adds to a 6 months Contract (7.5 years at $4000pa on 26w x 40h adds near $30 an hour to the hourly rate) they usually let you cross that out! (PI Insurance is insurance in force, so to be covered for all design done in the 6 months you have to hold it for the Statute of Liability period which is 7 years past the Contract end).

Also be VERY careful of Income Protection Insurance within Super. In many (or even most) cases the TPD definition can be very different between the policy and your Super policy. So if you get assessed as a being permanently fisabled and unable to work in YOUR field of employment by the Income Protection Policy and it pays into Super, many Super policies will not pay you a cent until aged 60 as their definition of TPD is unable to work in ANY capacity. So whilst you may not be able to wire a house, you may be able to flip burgers at Hungry Jacks. So double check this out carefully. My Income Protection is OUTSIDE Super for this exact reason, and it is tax deductable. I have Life Insurance within Super. This isn't something I researched myself, it is solid and valid advice from professionals in this field, which I then looked into myself (and found it to be correct).

Edited by yel327, 02 March 2015 - 10:32 AM.

[Ice]

Dont waste your time and money on being a company Craig coming from someone that has been in a partership for many years
i looked down this road many years ago not worth the cost that goes with it imho

[yel327]

I wouldn't do it any other way, not worth the risk being a sole trader if there is a risk of big liability not covered by insurance.

[N/A-PWR]

As a Sole Trader since time began,

 

I just hired my labour ( hourly rate ) out.

 

 

Also, don't take other peoples equipment off site,

 

which is where you can be liable if you lose it.

( loss of production costs etc )

my invoice states:-

 

work done as requested

[Rockoz]

Skap. These days if you apply for a trade account you sign that the directors will be held responsible.

If you sign up to do work on contract you sign that the directors will be responsible.

Not in every case but havent had one yet where it hasnt been a clause.

People want to protect themselves these days.

[Dr Terry]

We ran a sole trader/partnership for nearly 2 years & had 2 'close shaves' liability wise. We became a Pty Ltd in 1977  have never looked back.

 

I know have 2 Pty Ltds, one for the main business & another one for other stuff on the side. It just keeps it all above board, that's all.

 

Dr Terry

[wot179]

It all sounds too hard.

 

Im going on the dole.

[Ice]

It all sounds too hard.
 
Im going on the dole.

Thats the shot ya bludger

[wot179]

I don't think I could even if I wanted to in reality.

 

I own all my assets and have some cash in the bank.

 

Im only talking about getting a ute and running about the place doing stainless steel handrails.

 

Ive got all the gear and a few good contacts, so no real outlay aside from registering and public liability.

 

I cant figure out how it could go bad.

 

There is no chance I would ever get involved with a contract that had penalties for not meeting finish dates...Ive seen things go bad for others due to circumstances beyond their control.

 

What other things should I be worrying about regards "losing everything"?