Week 7, Question 2
Right.
Thanks to your votes, Matt and I are going to take a serious look at setting up that family trust. Not really sure what we're in for there but we'll see how it pans out.
Another thing I'm looking into is whether we should set up a company, now I'm working one day a week. Although I'm working out of a physio clinic I'm actually self-employed - what IRD call a "sole trader" which means it's all very straightforward.
But just about everyone I talk to who is working for themselves has set up a company, so I feel I must be missing out on something here!
Your thoughts?
posted by sortme @ 9:48 AM
7 comments
7 Comments:
Good gawd Steph........
You have just stopped buying lunches and going to the Gym...
so you are saving a LITTLE bit of money...
Next thing you are wanting to
buy another property to rent out.
Then you next wanted to spend heaps of money to set up a "Trust".
Now you want to spend heaps more on setting up a business...
STOP for gawds sake...
THINK about what you are doing.
You are rushing into no man's land with all this spending and will be forever in DEBT.
YOU asked us for our help to try and get you OUT of DEBT.
You aint excatly listening now are you.
But hey you are after all only fictitous (sp) aye!
So what does it matter what any of us say in this blog...
We are only in week 7:
You stopped buying Matt's lunches
You stopped the Gym memebership.
You wanted to buy a rental property.
You wanted to set up a Trust.
Now you are wanting to set up a business!!!!!!!!
You know the average person wouldnt be doing this all in less than 2 months... this is what people do over a few years.
Sheesh!!!!!!!!!!!!!!!!!!!
Setting up a company is a better idea due to having limited liability, If your business in debt they (creditors, such as debt) cant take your personal assets (house, etc.) from you..
This would beneficial for you, since you wouldnt be left with much after you get our assets taken off you , should your business placed in debt. (if you were a sold trader or partnership you could be forced to give up your house, car , etc.)
And remember, Its good to have limited liability, becuase after all 85% of businesses go bust / bankrupt in their first year, so if you fail youre protected.
Good luck.
Are you likely to have personal assets at risk by operating as a sole trader? I wouldn't have thought so. So a company is just more hassle and expense for no benefit.
Oh I so agree Anonymous. I am getting very bored with this "oh goodness how will I cope with no income" and six weeks later you're rolling in it and setting up a Trust and a company?! Good Grief. Pull your head in Steph, you are so unreal.
Well Step,
It actually costs very little to set up a company on the companies website (~20-40 dollars I think), and once setup, maintainance is free unless there are changes - even then the amount is neglibile. This is a good way to set up a company if you are computer savvy. However, get some advise on the structure first (which may cost you depending on how well you know your solr or accountant).
If I were you I would register the company as a Loss Attributing Qualifying Company (LAQC) so that any losses that are made in the company can be used to your best advantage as they can be offset against gross taxable income. This could help you get out debt a little. For example if your LAQC company has a loss of $10,000 and your income with "source deducted tax" is 30K (and therefore tax has been deducted on the 30K basis) then your income would be reduced to $20K (30-10), meaning you would be in for a refund which can be used against debt.
The other advantage with a company registered with the companies office is the fact that it limits your liability to the amount of equity(i think) that you have in the company. So if your creditors took you to task and tried to sue you they may not get far (unless they prove negligence).
The additional costs over and above day to day running expenses involved with a company would more than likely be only the accountants fees for the end of year accounts. You could probably arrange with your accountant to "prepay" to a degree on a regular basis which would spread the load. Having a good accountant would be essential to ensure tax obligations are met.
BTW I know of a number of people who decide to do what you are doing, rental properties etc and most have purchased rental properties (ie more than one) and set up a trust and company in less than a month! Of course they had to look at the cost, but what I am saying is don't take seriously what the last "caller" has said.
Yes start as a sole trader and if it works out THEN form a company. Firstly though work out a moveable business plan with heaps of back up and alternatives to try.
I agree with Anonymous....
i thought it would be a great website to help you and others get out of debt, but all this other talk should be wayyyy down the track
i dont get it, sorry.
Post a Comment