You’re looking to get into IT contracting for the variety of projects, the excellent hourly $$ rate & no politics but what do you need to set up and what are the real costs of IT contracting?

The reality is that it’s not that hard to become an IT contractor and setting up is relatively straight forward with everything you need to know online.

Company set up:

You can start contracting immediately as a ’Sole trader’. This is zero dollars to set up.

Once you start to earn over $60k per year you need to register for GST.

If you’re looking to become a contractor long-term you might want to set up a limited company for $150 as this can give you tax advantages. For example your tax rate can be lower than top personal rates.

Check out the differences between a Sole Trader & Limited Company structures click here.

Apparently New Zealand is one of the easiest places in the world to do business and start up your own company.

To see how to start up a business click here.

Provisional (Income) Tax, GST & ACC:

The IRD simply want to get paid the tax they are due.

Most professional IT contractors will be in the 30% tax bracket & the best tip I’ve had when I was a contractor is to keep 1/3 (ie 33%) of the money you earn in a separate account for tax and a wee bit more (to cover any oversights or expenses) & remember THIS MONEY IS NOT YOURS IT’S THE GOVERNMENTS.

If you are GST registered you add 15% to your invoices and the best way to think of GST is you are collecting GST for the government. Again put this into your separate account and don’t touch it until you pay your GST.

You also need to pay ACC being self-employed.

To see how much your ACC levy will be click here.

The number 1 way small companies get into strife is not paying their tax correctly.

Accounting systems: 

Of course we have Xero which is super easy to set up & is a flexible solution. If you’re only sending up to 5 invoices per month it only costs $27.50 per month.

To check out Xero click here.

There are other options on the market but many people love the simplicity of Xero as do I.


As a contractor you’ll be expected to record the hours you work & submit these to a line manager for invoicing purposes. This is a small piece of admin that is usually done on an email, spreadsheet or app.


Typically every month (or few weeks depending on your agreement) you’ll send an invoice with the hours you’ve worked to the company or IT recruitment agency. At Sunstone we pay within 1-2 days of when the work is complete.


There are plenty of accountants who will oversee your provisional tax (income tax) for your company & yourself (personal Income tax & how much you pay yourself or as a dividend - ask your accountant about this).

It will be cheaper if you reconcile your accounts & do your GST yourself and it’s VERY easy once you have Xero set up. It’s also quite fun as you’re learning how the nuts & bolts of a  business works and this adds to your professional business experience :-)

Again the number 1 way small companies get into strife is not paying their tax correctly so get a decent accountant and as long as you’re on top of this it’s plain sailing.

Sick leave / Public holidays / KiwiSaver: 

Sick leave. There is none.

The hours you work are the hours you get paid for & really any time you take off is covered in your contracting rate but it might be an idea to budget for some sick days off per year say 5.

You won’t get paid on public holidays or when you go away on holiday. When you finish a contract it can be a good time to turn this into a holiday before you get your next contract or at least make sure you budget for when you do schedule your next family holiday.

You’ll have to contribute your own money to KiwiSaver. If you contribute at least $1,042.86 a year (from 1 July to 30 June) to your KiwiSaver account you get the maximum Government contribution of $521.43. Ask your accountant or check out the KiwiSaver website here.


You can claim back work expenses like petrol (kilometres) to & from the work site, work tools (Laptop, Mobile etc), business coffees & lunches. Remember to keep your receipts for 7 years.

Here’s how expenses work click here.

It’s also good to think of some extra expenses that might arise like a new laptop, phone or vehicle so think a head and put away 3 months of earnings to give yourself a buffer.

More on things to think about before you become a contractor click here.


Most companies require Professional Indemnity insurance. You can search online for a broker or ask for a referral from an IT contractor you know.

You may also want to consider liability insurance should you get sued this will cover costs like legal expenses. If you’re working on large, expensive IT systems in mission critical enterprise environments (like banking, aviation or defence etc) where things could go wrong this is worth looking into.

Market Contract Rate:

Make sure you charge a decent contract rate. For shorter assignments your rate will be higher for longer-term ie 12 months+ it would be less. Talk to fellow contractors and find out what a ballpark market hourly rate and I’m always happy to advise on market IT contract rates for various IT disciplines as this is what I do everyday.

Professional conduct & 3rd party independent view:

Now you have your own company and you’re about to step on-site and start working as an IT contractor you can hold your head up high and be a true professional. Many professional contractors enjoy being an independent consultant as they can focus on the technical solution / project and not get caught up in the politics of an organisation.

Networking events / professional development:

Getting out to networking events & keeping up-to-date with latest technologies is part of the professional IT contractors job. This doesn’t have to be a crazy amount, but pick the right networking events for what you do & go to them regularly - become known. It’s also great to go on courses (online & physical) that will extend your skills & you get to meet excellent contacts in your industry which is a win-win situation.


A lot of IT contractors find their work extremely rewarding due to the purpose and the effort they put in - they get out. There’s a sense of pride in doing purposeful work for yourself, Your reputation is important and from doing great work it leads to more great work as you continue to build your contracting network.


I’ve been managing IT contracting relationships for nearly 20 years & having been a contractor myself and running Sunstone Group Limited I’m happy to point you in the right direction. Whether you’re looking to start out as a contractor or are a seasoned IT contractor looking for your next assignment get in touch. I’m always happy to advise you on the going contract rate for a particular skill set in Christchurch just reach out on: / 021 532 008

Disclaimer: Before you commit to any of these please seek professional accounting or legal advice as everyone’s situation is a little different.

Are you ready to step up & become a professional IT contractor?

Here are some of the IT contract roles we have currently live in Christchurch:

CONTRACT Java Developer, IT Jobs Christchurch NZ

CONTRACT Senior JavaScript Web Developer, IT Jobs Christchurch NZ

CONTRACT Software Test Engineer, IT Jobs Christchurch NZ

CONTRACT Senior C#.Net / Angular Full Stack Web Developer (TypeScript or JavaScript), IT Jobs Christchurch NZ

CONTRACT Senior Web Developer (Angular / TypeScript), IT Jobs Christchurch NZ

CONTRACT Intermediate C#.Net/SQL Software Developer, IT Jobs Christchurch NZ

CONTRACT Senior C#.Net/SQL Software Developer, IT Jobs Christchurch NZ

CONTRACT Senior C#.Net/SQL Integration Software Developer, IT Jobs Christchurch NZ

Wow you made it all the way to the end - I’m stoked so thanks for reading!

I'm Paul, I love coffee, Founder & Principal Consultant of Sunstone, an IT Recruitment & HR company specialising in recruiting IT roles within software, web, mobile, blockchain, big data, cloud infrastructure, security & networks in Christchurch & South Island of New Zealand.

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