Becoming a commercial contract driver is an awesome route to getting work on your own terms and growing your earning potential. To transition successfully from an employee to a sole trader, it’s crucial to know the nuts and bolts of everything involved.
We’re talking set-up costs, managing your taxes, registering for GST, organising ACC levys, and finding ways to scale your business. And if that last sentence sounded snore-worthy or scary, stay tuned!
We’re about to share the latest tips, tools and technology to help make these historical headaches a burden of the past.
Managing your taxes and GST as an independent contractor
When you become a contractor truck driver, you're most likely going to be a sole trader, which means you will need to pay your own taxes to the Inland Revenue Department (IRD). If you want to manage your taxes yourself it pays to be aware of the pros and cons of being GST registered prior to the mandatory threshold of $60,000.
Full-time contractors operating on the Road Ninja platform are unlikely to earn less than $60,000.00
Because when you earn over $60,000 per year, you will need to register for GST. Registering for GST means you’ll need to charge your clients 15% extra for your services, which you then pass directly onto the IRD.
Registering for GST is easy and comes with many benefits, such as being able to offset this cost by claiming back the GST portion on your eligible business expenses. You’re likely already paying for business expenses such as your phone bill and fuel costs, but there are many more operational costs required to perform your work that can be off-set too.
You also want to make sure you’re paying the right amount of tax at the right time. Drivers who owe more than $5000 in residual income tax from your previous year's return, will need to make 3 provisional tax payments the following year.
Provisional tax payments are based on your future income predictions, so avoid thinking “she’ll be right” when calculating your future incomes - getting these figures wrong can result in fines and penalties later down the road.
But read on, because there are cost-effective services that can handle this stuff for you.
Managing your ACC and student loan repayments as a sole trader
Whenever you file an IR3 tax return, the IRD will notify ACC of your previous year’s earnings. ACC will then calculate how much you owe and send you the bill. It pays to make sure that ACC has all the correct information, especially the correct levy, to ensure that you are charged the right amount.
Not only that, but if you have a student loan as a sole trader you will be responsible for managing the student loan deductions from your income. Again, it’s vital to have your numbers correct - so if all this information is making you sweat, stay calm! Keep reading for tips on how to manage your finances as a commercial contract driver.
How to manage your finances as an independent contractor
When it comes to managing the responsibilities of going it alone, there are many services available to help guide you through (or completely handle) the matters you need to take care of. All while you increase your earning potential and head towards greater financial freedom.
Working as a sole trader means that you can choose to keep track of your invoices, calculate your own taxes, manage your ACC levys and your student loan repayments yourself. You might want to consider separating your personal and professional income into separate bank accounts. That way you can set money aside to pay your taxes when you need to.
And for those of us who don’t have the head for numbers, expert financial advice from professional accountants can be a lifesaver. Or, if the idea of having your income tax, GST, ACC, student loan repayments and child support payments managed automatically sounds ever better, consider downloading Hnry.
When it comes to taking the leap into contracting, Hnry is an absolute game-changer. All you will need to do is make sure all your self employed income gets paid into your Hnry bank account. Then, Hnry will calculate and deduct everything discussed above automatically, before transferring what’s yours to keep back to you immediately - all for only 1% of your self-employed income.
Put simply, for every $100 you earn Hnry costs you $1. And if you don’t earn, you don’t pay. Sweet! Not only that, but Hnry can take less than 10 minutes to set up, so be sure to give them a call today.
Growing your business as an independent truck driver
To grow your earning potential as an independent contractor you might find the need to pull your socks up and get out there to find higher paying, more meaningful work for yourself - whether that’s by word of mouth, checking out online job boards, or signing up to online platforms like Road Ninja.
You can find work from the comfort of your couch using online job boards like Trade Me, Jora and Seek - all three websites advertise contract and temporary work for truck drivers.
As well as job boards and specialist recruitment agencies, there are specialist online platforms dedicated to connecting drivers directly to contract truck driving jobs and opportunities, as well as helping with industry specific requirements too.
We created Road Ninja as a way forward for independent truck drivers. It’s easy to create your profile with a short video to pitch your services to companies looking to hire drivers for commercial purposes. Not only can you get jobs on your terms, but you can resolve issues and get details immediately through our online web and App chat function, too.
Plus, the Road Ninja Platform will help you to:- Organise and schedule jobs
- Sync your work with your personal calendar
- Complete and maintain records of vehicle pre-departure checks
- Create itineraries
- Give and receive feedback from the transport companies you work with, once your job is complete
We also arrange Public & Statutory Liability insurance for all our drivers (subject to policy terms, conditions & exclusions) at no cost to you!
To get started on your independent truck driver journey, download our app today. That way, you can set your own rate and choose the jobs you want.
