Working as a contractor

[tripsis]

I'll be moving house in a fortnight and the landlord of the property has offered me work as a contractor doing landscaping/gardening of the property. I think it's a good opportunity for me, as it means I'll be able to be paid for what I'd be doing anyway and work at home. With that said though, I've never done contract work before, so am seeking advice.

I know I need an ABN, so I'll be applying for one in the next couple of days. It also appears I'd be eligle to be pay extra for superannuation. But what else do I need to do?

Should I be getting paid more than what I'm asking for to cover for GST? Does GST apply to me? Do I need to apply to the government to be paid it?

What about insurance? As I'd be working for myself, I would have to organise insurance myself. So then do I ask for additional money to cover that? How much does insurance cost and where I do I find it?

Anything else I'm missing?

Thanks!

[dworx]

Abandoned

Edited March 15, 2012 by dworx

[Marcel]

How long's the work going to last? If it's a relatively short stint, I personally wouldn't bother with anything other than getting an ABN and putting a fraction aside for tax.

My dad's been a self-employed painter for over 25 years and only gets insurance on the odd occasions when the client demands it.

GST is only applicable if you're making over $75,000 p.a., though if you're charging it, you will probably owe it.

There may be some licensing issues, but they usually only apply if you're advertising your services.

Maybe you can offset some of the earnings in your rent? That way you'd be up for less tax.

Have you experience working as a gardener/landscaper?

[Foo]

You need to pay your own super out of that money. As a basic rule Super and leave are about 20%. So put 20% on top of what you would expect to be paid. Dwrox is totaly right though, you need insurance but that would cost too much to make a small job viable.

[dreamscape]

As long as you're charging a set price for the job, and its under $3200 then you shouldn't need a license. Contact master builders to make sure that applies in your state as it may be different. If there is any major work being done eg installing retaining walls or erecting patios then the owner might also have to have an owner's builders license. If there is any structure closer than 2 meters to the existing boundary then you will need council approval. It's a tricky area and depending on the scale of what the owner wants it might also be a good idea to get someone to draw up exactly what is going to be done before you agree to anything. An architect will also be able to advise you on the legality of the intended changes. I have done a lot of this type of work and one of the biggest things that i have found is that you and the client have to have an exact understanding of what you are there for or these lines can blur... It's frustrating as hell when your half way through part of the job and the owner comes to check it and thinks that they can change their minds. Also you don't have to pay yourself superannuation however it is a good habit to get into, and I usually include it in an hourly price or better yet day rate.

My advice is to give it a go why not it is always a steep learning curve but well worth it to see the results at the end of the project.

Good luck dude.

Dreamscape

[tripsis]

How long's the work going to last?

Not sure, as long as it take I suppose. The garden is pretty shit at present, mostly Agapanthus and weeds, as well as a few garden plants scattered around the place in a not very visually appealing manner.

My dad's been a self-employed painter for over 25 years and only gets insurance on the odd occasions when the client demands it.

Even though, I don't want to run the risk of injuring myself and then having to bear any costs that result from that. If I can get the guy to include extra in the rates I'm charge to cover it, I plan on doing so.

Have you experience working as a gardener/landscaper?

No, not really. I wouldn't have the skills to do any serious landscaping (such as retaining walls, etc., but am capable to making a garden look nice through the gardening aspect alone.

You need to pay your own super out of that money. As a basic rule Super and leave are about 20%. So put 20% on top of what you would expect to be paid. Dwrox is totaly right though, you need insurance but that would cost too much to make a small job viable.

Thanks, that's good to know. I'll be sure to mention that to him.

As long as you're charging a set price for the job, and its under $3200 then you shouldn't need a license.

I'll be charging an hourly rate. Any thoughts on what a decent base hourly rate is? I said $20, but wished I had said more now.

The sort of landscaping I have in mind won't require any structure to be built, simply for the fact that I'm not qualified to make them, nor care to do so. I wouldn't mind having the yard levelled somewhat, but can work with the slope if I have to.

Cheers for all the advice.

Edited April 11, 2011 by tripsis

[ThunderIdeal]

twenty bucks is too low IMHO for a skilled person working hard. most casual workers get more than that these days PLUS suber, casual workers don't get paid sikies or annual leave, so think or your hourly rate for labour as a casual rate.

as for injuary, i hate to seem so rash and downplay dangers or whatever, but gardening by yourself on private property should be pretty safe for ya. lots of things can go wrong, but on the scale of things it's pretty safe and you can use your brain and experience to keep those risks to a minimum.

[Torsten]

If you don't want to get insurance you can get away with claiming that the work you were doing at time of injury was private gardening. ie always invoice after the job or don't put the job description on the invoice.

re super, there are two schools of thought. One lot likes the idea of super as it is low tax and great for retirement. The other lot thinks that whatever you save in tax now the government will probably decide to tax later on [anyone including and after GenX will probably get double taxed] so you're better off paying the tax now and using the money for your own investments. Goivernment all around the world can't help themselves dipping into super and pensions, so there is plenty of precedent for this. ie, if you know a little bit about investing for the future then don't bother with too much super if you don't have to.

The payrate depends on your performance and skill. anything between $20 and $40 is valid for your kind of work. the rate is not just determiend by the work you do, but also by the work conditions. eg, being able to work whenever you feel like it wihtout any pressure usually means a small paycut. So if a normal unskilled landscaper labourer gets $25/h, your $20 quote for 'work from/at home' isn't too far out. Mind you, if you are a good worker then you should probably get more. And if you decide to register for GST then make sure you add that too.

Once you have an ABN you will find there are other benefits too. ie, some of the losses you may have in your payrate could be offset by tax bonuses. eg if you have to drive 200km to pick up some plants at a nursery then you can claim the fuel costs [ie if you decide to go fishing for a weekend, make sure to pop into a nursery at the destination and buy a few plants before heading home as your fuel is then tax deductible - just don't tell anyone about the fishing]. Little trips to bunnings are also claimable - even if you did your shopping on the way. Make sure you set up an office [ie desk] in the house and deduct rent and overheads. eg in a 3BR house you can claim 1/3rd of the rent and 1/3rd of all the other bills [power, phone, heating, broadband, etc]. The reason why this is important is that depending on what your annual income and hence tax bracket is, you could save between 10% and 55% on anything you claim. Any plants and seeds you buy are obviously for the business, so you claim them too.

If you end up earning 10K for landscaping work, don't be shy to claim well over that in costs as any start up business will have very high costs in the first year. So essentially that 10K you earned will be tax free if you're clever about it [if you claim more than you earn you will be able to use the difference in a following year]. Just make sure to keep EVERY receipt you can get from now on and make sure to put a lot of your activities into the context of your new business. You will be surprised just how much you can save if your business is so closely related to your hobby and lifestyle. Trips to EGA, books/DVDs, parking fines near the botanic gardens , all your stationary and computer gear, building materials, etc

[tripsis]

There's some good advice there Torsten.

So insurance is supposed to be compulsory? You're right TI, there aren't huge risks gardening on one's own property, but it's easy enough to do your back in, etc.

What benefit is there is volunteering to pay GST? I registered for my ABN earlier tonight and chose not to register for GST and GST fuel tax credits. Should have I done the opposite? I can apply to register for GST later.

Good point about the super. I suppose as long as I'm paid for what should be for super, I can invest it in other ways, ways that the government has no access to.

Hmmm, now I've got to think of a way to ask for more. I'd like $25, even more, but would be happy with $25.

Oh wow, the possibilities are endless! Being able to claim for rent, bills, computer gear (I need a new computer ), stationary, tools, plants and seeds! And parking fines near the botanic gardens.

[santiago]

torstens comment above reminded me of a small business i started a few years back whilst i was on a pension from the government, it was only what i would describe as a micro business and it was all legit.

i kept highly accurate records, log books, expenses and bills etc and also was hoping to claim for rent etc which is all above board and very claimable, i too drove long distances and no job was too small....even if it meant driving many many kms for just a quote.

anyway i had this dream that at tax time i was going to get a shitload of money back due to my records management and the fact i kept a huge box of reciepts etc.......................however due to being on the pension and the microbusiness not exactly turning over alot of income, i wasnt paying alot of tax plus being on that pension as i mentioned i was hardly paying any tax on that income either. i reckon i had about $6000 or more of claimables but i overlooked the fact that for the whole year i only paid about $1000 in legit tax mainly due to that fact that the pension is pretty much tax fee.............................anyway to my horror the big goal of a healthy tax return i worked so diligently for evaporated when the tax man had to spell it out in very BIG LETTERS over and over that i couldnt get back more in tax than i had paid, which is not really a prob for the bigger companies who pay a truckload of tax....................but for those of you out there who dont hardly pay tax...........like those on government benefits, just remember you cant get back more in tax no matter how pretty your log book looks than you pay in tax.

seems pretty simple but the dipshit writing this post didnt have a clue.

[Torsten]

just remember you cant get back more in tax no matter how pretty your log book looks than you pay in tax.

 

Just a word of caution here. While this is certainly true, don't forget that such credits carry over into following years.

So if you are on a pension and intend to stay on that pension then there is probably little point. However even if you are on a pension now, but intend to have a higher income in the next 5 years [or more] sometime, then the credit can still be used.

From the table below you can see that if you earn 6 - 37 K you will only save maximum 15%. At 37k that would be 15% of 31 which is $4650, ie about 6 weeks worth of work.

However, if you earn 50K then you get the $4650 plus 30% of 13K which is 3900, thus a total of 8550, ie almost 9 weeks work.

So you can see that the more you earn the more worthwhile the book keeping gets.

And your credits don't have to be used in the same business either. My sis used her retail business credits for a B&B for example.

2010 to 2011 Financial year Australia Personal Income Tax Rates:

$0 – $6,000 - Nil

$6,001 – $37,000 - 15c for each $1 over $6,000

$37,001 – $80,000 - $4,650 plus 30c for each $1 over $37,001

$80,001 – $180,000 - $17,550 plus 37c for each $1 over $80,000

$180,001 and over - $54,550 plus 45c for each $1 over $180,000

[zahsone]

One thing to remember if you are registered for GST is that you will have to submit a BAS statement quarterly which is a pain in the ass! Insurance costs around $60 a month for just public liability for this type of work also

[tripsis]

Yes, I read something about having to submit BAS statement quarterly (or even monthly if the work is less than 3 months), which is why i opted out of applying for GST. Perhaps at a later date I'll apply for it if I see it as worthwhile, but at the moment is seems to be more paperwork than is worthwhile.

Anyway, I spoke to the guy and he seemed fine with $25 an hour as the base rate. Will discuss whether he's prepared to pay more to cover for insurance too.

[Hendry]

Taxes? ...,on landscaping,?,.. Come on now,

[mescalito]

Some words from an Ex-Con...tractor

Keep ya eyes open,ya mouth shut and look after ya knees and back!

Serious!

Ummm yeah it's nothing now as what it used to be back when I was Contracting in the 90's,we had to have the Insurance of course,but basically we payed 20% P.P.S. tax from each fortnights pay,so we never missed it.

Then each tax-time we all got a nice refund.

Then along came the dreaded G.S.T. that saw the demise of a lot of subbies as we worked hard and long,not in it for the paperwork!

Moral of the story is that the Government saw we were working Hard and making reeeealy good money,so they just made it harder and employed more fools to handle the cash and assets.

If you don't do the BAS statements they will send the boys 'round