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    • Justine1

      Business Owner


      paye vs contract vs percentage

      Question submitted 17/07/21 @ 06:13am

      I currently a sole trader renting 1 room. Im expanding the business into 3 rooms and am thinking of renting one room on a daily rate (not entirely sure how to set this) I'll work from one and will rent it out x2 days a week. The 3rd room I'll put in students/workers and was thinking 60/40. Predominantly I'll be pulling in the clients. My question is what's the best way to utilize the rooms? Our receptionist will be on paye but I'm not confidant to employee more staff, mostly due to fear of the unknown.

      Category: Services
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      • Andrew Hamilton



        Reply submitted 17/07/21 @ 06:13am


        Hi there – been musing how to answer this.

        I have seen a number of different pricing models like an employee cost is 30% of the services invoice – e.g. if it costs you $30 to deliver a service with your employee, then you charge the client $100 – that is a 70/30 split with 70 going to the employer. Then some people who hire out contractors take less margin, and it is more like a 40/60 split with 40 going to the employer.

        This does not take account however of what is the market rate for the services you are offering – I would start there, and then work back – if you are employing people then there is clearly more cost in this, if you are contracting less – and then if you are just giving them access to use a room, then in this latter case it really depends on how much income they earn and what is a reasonable rate to rent the room – you don’t want to lose money on it, but you also don’t want to charge so much that the tenant can’t make any money.

        Good luck.

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