Mrs Kiwi

Hi,

my husband is currently a permanent employee with super, holiday pay, sick pay etc... but his boss is lazy about paying super and we have to keep nagging him about it.

He has suggested that my hubbie go self employed and pay his own super, tax etc... and have no holiday and sick pay.

He has asked us to go away & think about what hourly rate my hubbie might want!!

What shall we ask for? Are my workings out below correct?

I reckon we should take my husbands current employed hourly rate and;

+ 9% for super
+ 30% for tax
+ 25% for casual loading (no sick pay or holiday pay)

- Does this sound correct?
- Will my hubbie need an ABN if going self employed?
- Is there a rough tax calculation we can do to work out how much tax he will pay?
- What are the pro's and cons of being self employed apart from the obvious one of no work, no pay?

Thanks in advance guys.

Petals

He will need an ABN and he will also need to cover his own insurance. If he is sick he will not get paid and if there is insufficient work then he may welll be told to go home or not come in that day that is the way it works when one becomes a contractor.

Its obviously a cheaper option for the employer as they have no ongoings.

Think very carefully about it. Of course you can work for others too if you contract.

ABCDiamond

The extra 30% for tax may only apply if you are working on an increase from net pay.

Your employers current costs will be:
$x per hour x 38hrs x 52 weeks
+ 9% super = a total of $y per year

Self employed should be something like
$y divided by 45 weeks to allow for holidays divided by about 35 hours. = $w per hour

eg: at current $30 per hour:

Your employers current costs will be:
$30.00 per hour x 38 hrs per week x 52 weeks per year = $59,280.00
plus 9% super = total of $64,615.20 per year

Therefore self employed should be:
$64,615.20 divided by 45 weeks = $1435.90 divided by 35 hours = $41.03 per hour

ie: minimum of say 40% higher than current gross hourly rate.


His boss is lazy about paying super ?? It is a compulsory thing for them to do, at risk of financial penalty from the ATO if they don't.

And Yes, he will need an ABN as self employed.