Making the decision to start earning income independently can be one of the most rewarding and exciting choices of your life. You get to work on your own terms, follow your passion, be your own boss, and forge your own path.
In the past, being a self-employed contractor, freelancer or sole trader could seem scary – a lot of people were put off by having to take on the hassle of tax and compliance. Having to worry about things like Income Tax, GST, ACC, Accountants and online calculators used to make self-employment a daunting prospect. You only have to do a quick Google search to find a load of articles and blog posts about self-employment, where the entire focus is on how you’ll need to learn the tax system before you start. Reading through these, it’s no wonder people used to think self-employment was difficult!
Now that Hnry makes being self-employed as simple it having a permanent job, it’s time to focus on the other things you really need to know – here are 7 things you’ll want to think about:
1. Finding work may be easier than you think
There are plenty of contracting and freelance jobs available that could be right for you, no matter whether you’re looking to work part time, full time or on an ad-hoc basis. Below are some great websites as a starting point where you can find the perfect work for you:
Allsorts: Not the licorice kind, but just like them you might find a surprise treat in there. If you’re looking to find freelance work or small contract jobs, Allsorts is a great place to look.
The Big Idea: The Big Idea is New Zealand’s online hub for creative people, providing information, job postings and interesting content, specifically for the creative industry
Fiverr: Why limit your awesome services to New Zealand? Just like the website says: “Don’t Just Dream, Do”. Market/Advertise your services on Fiverr. From graphic design to fortune telling, people are on Fiverr right now looking for what you offer
Recruiters: Recruiters love finding people work; that’s their job! There are a bunch of recruiters out there that are happy to help you out. They specialise in understanding what you are looking for in a job and finding something that’s suited to you. You can get in touch with them yourself. Don’t be shy! If you’d like to know which Recruiters Hnry recommends, just drop us a line.
2. You’ll want to dedicate time to building your network
A strong network is important to keep work rolling in consistently. Luckily, there are a wide variety of opportunities for you to establish and maintain a network, as well as being able to advertise your skills and services:
Meetups: Find and meet like-minded people in person through Meetups near you. Find some Meetups that cater for your industry or specialty, and use the opportunity to collaborate and learn, to grow your skillset. Sometimes it is ‘who you know’ that can land you your perfect job.
3. Don’t forget to develop your skills and invest in yourself
Skills are what set you apart from others when looking for work, and soft skills are just as important as hard skills. Even once you have secured work, you’ll want to spend time investing in new skills, to develop your capabilities:
Creative Pool have put together a really good blog on the vital soft skills that any contractor/freelancer needs to be successful. Having a great relationship with your clients is the key to getting future work, so make sure you build out your soft skills!
Eventfinda is also good to find upcoming business conferences and workshops near you that can help develop soft/hard skills in your line of work. You may be able to claim back the cost of attending as a business expense too.
4. You don’t need to register as a business!
A big misconception that people have as they head into self-employment, is that they need to be registered as a business to trade independently. This isn’t the case! Registering as a business unnecessarily can end up creating lots of work for yourself, not least because you’ll need to file tax returns for both your business, as well as for yourself as an individual. Some people mistakenly believe that registering yourself as a business provides you more legal protection, however if you are going to be a sole director, it doesn’t make any difference.
When trading as an individual, you can choose a Trading Name, a Logo and have the ability to get tax relief on business expenses and purchases. If you’re a sole contractor or freelancer, there really isn’t any need to increase your hassle and costs by registering as a business.
5. Make sure you put aside some money for any times you’re not working
Even though you won’t get paid if you take sick days or holidays, it’s really easy to set money aside just in case. The freedom of being self-employed means you get to choose when to take your holidays, where the only limit on the amount of time you take off being how much you can afford it!
We recommend keeping about 2-3 months’ worth of earnings in your savings, to cover you covered for any sick days, holidays and time between contracts where you may not be working.
6. Keep that KiwiSaver ticking over
As a self-employed individual, you’ll want to be planning for the future. Paying into your KiwiSaver is a really simple way of making sure you’re thinking ahead. If you are unsure about KiwiSaver, you can find out more here.
When deciding how much to pay into your KiwiSaver, it’s worth keeping in mind that you can receive $521.43 free each year from the government with the Members Tax Credit (MTC). Here’s how the MTC works:
- The government will contribute $0.50 for every $1.00 that you contribute, up to a maximum of $521.43
- To get the full $521.43, you will need to contribute a minimum of $1042.86
- This roughly amounts to $20.00 per week that you’ll need to set aside
If you’re a Hnry customer, you can nominate percentage of your income to go straight into your KiwiSaver every time you get paid, so that you never have to worry about it.
7. To GST, or not to GST? Let’s clear it up…
If you are going to be earning over $60,000 per year, then the IRD says that you must register for Goods and Services Tax (GST). If you are earning less than $60,000 it isn’t mandatory that you sign up, but there’s nothing stopping you from doing it. If you’re registered for GST, you’ll need to charge 15% extra for the things you sell, however you can also claim the GST portion back, for any eligible business purchases you make.
Self-employment is a blank canvas, and now that Hnry makes being self-employed simple and easy, there’s nothing to stop you from painting your very own masterpiece – so make the most of it!
More and more people are earning money independently every day, whether as a side-hustle alongside a permanent job, or as a full-time freelancer or contractor. It’s an exciting adventure, and we’re sure you’ll never look back once your journey starts.
Have any questions? Anything you think we’ve missed? Get in touch and let us know!