Why I started Hive Club

09.07.20 04:51 PM Comment(s) By Ivo van Onna

I started Hive Club when I lost my biggest client

It is July 2020, we're at the height of Covid19 and in lockdown. My biggest contract to date just expired. Even though I knew it would happen sometime, I didn't prepare for it. Of course. That's why I launched Hive Club: to finally put our freelancing finances in order.

When I started freelancing in South Africa in 2015, I learned that the simple concept of running a small business is not that simple in actual fact. I didn't know anything about legal entities, tax regulations, business expenses or how to arrange for my own employment benefits and financial security. Nor did I have a network of accountants and legal practioners.


I then consulted fellow freelancers. Working for the biggest companies in the country, it was easy to see that each of these companies contract thousands of freelancers at a time. Surely my colleagues would know how to do these things, since we all operate in very similar circumstances? Wauw, was I wrong! 

It's tough to figure it out as a freelancer

Asking five different freelancers returned five different legal and tax structures. One would run his work through a PTY Ltd., the other would work in his personal capacity or as a sole proprietor and yet another one would work as a personal service provider. During my first few years I would regularly switch between my PTY Ltd. and working in my personal capacity, which made book keeping quite a challenge. 


With that, taxation also changed. The one moment I would pay PAYE on my entire revenue, the other moment only on the salary I'd draw (about 50% of revenue) - that's half the amount of tax. Another moment I would read up on tax regulations and learn that I was in fact a personal service provider, which again changed my tax liabilities. And, oh yeah, since I wasn't prepared for that, I'd be in debt to SARS, paying off arrears for another year.


Next thing I knew, I would get a call from very senior colleagues. Their contract wasn't extended. Would I know about another position? They knew this moment would come, but they hadn't saved anything... Neither had I. And worse, my accountants (I was on number four by now) made a mess by submitting the wrong information to SARS, which ended up big and unneccessary losses - purely based on the wrong information. I never felt in control, always running after the facts.

Time to make a change

Over a period of 3-4 years, I had read a lot about tax regulations and legal entities. And I thought it useful to share that knowledge with other freelancers. Of all the freelancers I'd met, less than a handful had arranged their finances well. 

The basic problem I observed, was that I was taking business risk on the one hand (short term contracts, no employment protection) while being regarded as an employee by SARS on the other (highest possible taxation). And most of my colleagues hadn't tackled this issue either, because they weren't aware of the applicable legislation and running the risk of getting into tax-debt or because they had given up and simply accepted the higher taxation rate. None of us were in a good position to build enough fat and financial security of ourselves and our businesses. We were just getting by, hoping to stay in a contract.

A new approach

After years of research, I found the suitable structure and approach that allows freelancers to simply join a running practice, where administrative functions are taken care of, allowing for tax breaks (i.e. deducting business expenses) while at the same time providing employment benefits to grow more financially secure.


The basic model that arose, was that of (1) keeping more money in your pocket by getting a tax break suitable to a business, (2) using the freed-up monies to grow your financial security through employment benefits like insurance, unemployment buffers and retirement and (3) use whatever is left to achieve your goals. At the same time, by sharing the administrative functions, administrative burdens and cost would be reduced.

Help build the platform

If you feel in need of more financial security as a freelancer, but you don't know where to start or you just have enough of the trial and error of a small business, please join as a prospective member and give us feedback on what we offer and what you need. 

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