Kia ora, and thank you for considering contracting with us here at Find Recruitment!
We've put together some of the top things you'll need to consider as you get started on this journey, as well as some key contacts you can reach out to in each of our teams, to begin discussing your career objectives and goals!
Possibly the most important point, is that as a self-employed contractor, you'll be paid a gross hourly rate. This means that all tax obligations (income, GST, ACC, Student Loan, etc.) become your responsibility.
You'll be responsible for ensuring that you are paying the correct amounts, on time, to the IRD and are managing your financial flow. This does also mean that you will not accrue annual or sick leave, and won't get paid for public holidays, during your contract, so you'll need to self manage this also. Essentially, if you're working then you get paid - which is great if you regularly work long hours.
Your IRD (Inland Revenue Department) Number keeps track of the tax you pay and helps make sure you're paying the right amount, and/or receive the correct entitlements.
More information about IRD numbers, and applying for new numbers can be done online. Click here to view the IRD website.
As a contractor, if you're expecting to earn over $60,000 per year in any rolling 12 month period, then you're going to need to register yourself for GST. You are then required to add GST (Goods & Services Tax) to the price of your services and file all GST returns with Inland Revenue.
Registering for GST is a simple process which can be completed on the IRD website (click here to view). When registering, you will have to select whether you will file your GST returns every 1, 2 or 6 months. This will also determine how often you must make payments to the IRD for any GST owing.
If you have registered for GST, you will need to inform us and provide us with your GST number. We will then add GST to all payments that are made to you, and the GST will also be reflected on the buyer created tax invoice that we will provide to you. A buyer created tax invoice is simply an invoice that will be raised by our finance team, rather than by you, based on the approved hours you have worked, and your hourly or daily rate. This is available for you via our timesheet and billing system.
You will need to pay the GST charged on your services and paid to you on to Inland Revenue at the frequency determined when you first registered. It may be advisable to hold your GST in a separate bank account, so that it is separate to your day-to-day and business expenses, and is set to pay to the IRD as soon as the billing date rolls around.
You are also able to claim back any GST paid on any business expenses you have incurred. To do so, you will need to ensure you keep the tax invoices as a record for a minimum of 7 years.
Inland Revenue requires all labour-hire firms, such as Find Recruitment, to deduct withholding tax from payments that are made to contractors. Withholding tax must be deducted regardless of whether you are operating as a sole trader, through a company, or through any other legal form.
To ensure that we are deducting the right amount of withholding tax when you start an assignment, you will need to complete an Inland Revenue 'Tax Rate notification for contractors' form. This form provides us with the details of your IRD registration, and determines what amount of withholding tax should be withheld from any payments to you, then paid on to Inland Revenue.
If you do not complete and return this form to us, we are required to deduct at the no-notification rate of 45%.
As a self-employed contractor it is your responsibility to calculate and pay the correct amount of Income Tax to the IRD. The IRD class your self-employed payments from Find as Schedular Payments and your Tax Code will be WT. On occasion, there may be other deductions required by the IRD. Self-employed contractor tax is different to standard PAYE where income tax is deducted automatically by employers on behalf of employees. The following IRD link explains schedular payments https://www.ird.govt.nz/income-tax/withholding-taxes/schedular-payments. Further into this link you will find an IRD tax rate estimation tool.
We highly recommend that you use an accountant to receive accurate tax advice or employ the services of a company that can provide you with such advice to ensure that you are paying the correct amount. The added benefit of this, is that an accountant can also advise you on additional benefits that come with being a self-employed contractor, and what work-related costs you may be able to claim tax back on.
You will be required to pay your own ACC levies. Typically included in PAYE, the ACC levy is an additional contribution that must be paid by you as a contractor. Levies are charged based on the type of work you perform - i.e. the higher the risk to your health and wellbeing, the higher the levy will be. Thus, it is important that you use the appropriate Business Industry Code (BIC) from your tax return or GST registration.
ACC will then use this BIC to assign you to a classification unit that best describes the type of work you perform as a contractor.
It is extremely important that you protect yourself against being sued by a client for making a professional mistake or damaging their property or reputation. Professional Indemnity insurance can provide you with cover in these circumstances.
As part of our commitment to our clients, we required all contractors to have the insurance listed above, and for these to be insured for at least NZ$5M.
You are welcome to arrange your own insurance cover by talking to an insurance broker, or alternatively Find Recruitment can include you in our group policy at an additional cost.
Further information on our policies can be obtained by speaking to any of our recruitment consultants.
There are additional considerations that come into play as a self-employed contractor. Repayments for Student Loans you are obligated for, or contributions towards your KiwiSaver. These can be arranged by yourself directly with the IRD.
Thanks for your interest in what we do here at FIND. We love meeting and helping amazing kiwis every day and will always do our best for our clients and candidates. We've been simplifying the recruitment game since 2008, so don't hesitate to get in touch if you need our help!
