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Reply To: Kia ora. Would love some advice on how to structure my payment system to contractors. My business is all online. A portion of my business will be bringing in facilitators who I’ll be hiring to do the work. The work is created by the facilitator but ownership belongs to the business. Rather than giving them an hourly rate, I want to share the profits of the product they create for my business (75-25 %roughly) so they only get 75% of profit at the end of every month.My question is, what’s the best way to structurethis in terms of payments, taxes, accountability to IRD  etc. also I’m very new to business. Is there anything I  should be thinking about when paying people thank you 

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Hi there,

There are obviously quite a number of ways to tackle this, but I would suggest that in you system you need be able to identify the monthly sales created by the facilitator (for example, set the product up as a inventory item so they are going to sell the inventory and at the end of the month they can run a sales report by inventory), so you can work out how much to share with that contractor.

In this case you are in a better position than a seller to determine the price of goods or services. The business will then issue the tax invoice rather than the seller, through “buyer-created tax invoice”.

Buyer-created tax invoices are most commonly used in New Zealand’s primary industries such as farming, fishing and wine-growing.

You can refer to the below link for more info:
https://www.ird.govt.nz/gst/tax-invoices-for-gst/buyer-created-tax-invoices

Hope this helps.
Cheers
Nelson