Starting a business
It can be hard to know where to begin when starting your own business, but meeting your tax and legal obligations should be a priority.
Once you’ve laid solid legal foundations for your business, you can then start developing it with confidence.
On this page:
- Business structures
- Business names
- Business taxes
- Licences, consents and permits
- Further assistance
Businesses commonly use one of three business structures:
- Sole trader
If you’re a sole trader, you’re in complete control of your business. The profits are entirely yours, but so are all the responsibilities and liabilities – including any debts your business incurs.
Becoming a sole trader doesn’t require any legal paperwork, which is why many businesses in New Zealand start off as sole traders.
Find out more with Focus on sole traders.
If you’re in a partnership you’ve chosen to pool your assets with others into one business, with the profits and losses of the business divided between you. These types of businesses are established with partnership agreements, which set out in writing the division of profits and losses.
Find out more with Focus on partnerships.
A company is a business that is a legal entity in its own right, separate from its shareholders.
This is important because the company owns all its assets and liabilities, which means your responsibilities for any debts are generally limited to the amount you’ve invested as share capital in the business.
Every company in New Zealand has to be incorporated – or registered – with the Companies Office (the national registrar of companies).
Find out more with Focus on companies.
Find out more about Business structures.
Find out about Tax implications for different business structures.
A business idea often starts with a name, but your preferred choice could already be in use or contain banned words or phrases. Check if you can use your intended business name with the following resources.
As soon as a business name is reserved on the companies register, it is impossible for others to reserve the same or a similar name within the next 20 days. That name protection becomes permanent once the company is registered. This protection only stops other companies being registered in New Zealand under the same name and should not be confused with the intellectual property protection offered by a patent, trade mark or copyright.
The Companies Office is also the place to find government restrictions on the types of names you can use.
IPONZ is the organisation where patents and trade marks on original commercial assets – including business names – are registered. Use the office’s database to make sure your preferred business name isn’t already being used as a commercial asset and, if you already have a logo designed, register the unique combination of words and images that make up your brand as a trade mark so others cannot copy it.
Unlike companies, sole traders and partnerships don’t have any protection over their business names. However, they can apply for a trade mark from IPONZ for their brand or logo to give them exclusive rights to use it in a unique way.
A Google search or a search through the Yellow Pages and other business directories can help you find business names already being used by sole traders or partnerships.
Find out about Intellectual property protection.
All businesses must register with Inland Revenue for tax purposes, but companies also have to be incorporated with the Companies Office. The first step is to get an IRD number from Inland Revenue.
Sole traders and partnerships
If you’re carrying on business as a sole trader you should return your business income under your personal IRD number. Partnerships must have their own IRD number.
If you haven’t got a personal IRD number, you need to apply for one by filling out an IRD number application – individual (IR595) or an IR595A for a partnership
If your business will be run through a company, you need to get an IRD number for it. However, rather than going through Inland Revenue, you can do this through the Companies Office when you register your company for incorporation.
Reserving a company name costs only $10.22, while registering a New Zealand company costs $150. Both can be done online with the Companies Office.
You must also register with Inland Revenue:
For GST (Goods & Services Tax).
Businesses must become registered for GST once they reach (or expect to reach in the next 12 months) an annual turnover of more than $60,000. Once registered, you collect GST for the government on the goods and services you sell and can claim GST back on the goods and services you buy for your business. If your turnover is under $60,000 you may choose to register voluntarily.
Find out more about GST.
To become an employer.
When you start employing staff, you must register as an employer with Inland Revenue.
You’ll also be asked whether you need to register for Fringe Benefit Tax (FBT) and the Employer Superannuation Contribution Tax (ESCT). Find out more with Business tax and levies.
Don’t register as an employer if you only hire contractors. Find out more about Employee types.
If you’re a sole trader, or carry on business in partnership with others, you will pay income tax on your profits. But if you start a company, its profits will be taxed separately at the company tax rate. You also pay income tax at individual tax rates on dividends received from the company, but you can claim a tax credit for any company tax already paid.
However, your company may also have other tax obligations for GST, for example, or FBT, if you offer your employees fringe benefits.
Find out more with Business tax & levies.
It’s not just Inland Revenue or the Companies Office you might have to work with. Regional councils and other bodies may also play a part in the setting up of your business.
If you plan to work from home, for example, or you want to open a café or bakery, you have to apply for a licence first with your regional council. Your local council also regulates health and safety standards for all businesses and building permits, so it’s worth making contact before you start your business.
Depending on your industry, you may also have to work in line with a specialist regulatory authority. These agencies regulate product and service standards, the use of environmental resources, and anything else that might concern public safety by making sure businesses adhere to the relevant standards and codes of practice.
Find out more with Regulatory authorities.
If you’re unsure about what you have to do when setting up a business for the first time, consult your lawyer and accountant. There is also a wide range of public resources that can offer further information and assistance:
Biz Information is a nationwide phone advice resource for small businesses that works alongside Business.govt.nz. Simply call 0800 424 946 (0800 4 BIZ info) to speak to an adviser.
New Zealand Trade and Enterprise
Planning for success guide from NZTE:
This tax advisory service for Māori can be accessed at most Inland Revenue offices. If you run or are part of a Māori business, organisation, sports club, non-profit body, marae or kohanga reo, this service should be your first port of call. Kaitakawaenga Māori are particularly helpful for organisations in which treasurers are voluntary and frequently change.
You can request a visit from Kaitakawaenga Māori online.
Business tax information officers
This is a free tax education and advice service for anyone who is in business, considering setting up a business, or helps run a sports club or other non-profit body. Tax information officers regularly help small businesses keep better records, plan ahead for their tax obligations and generally get things right the first time so they can get on with the business of making money.
You can request a visit from a business tax information officer online.
The tool for business
This is an online tool from Inland Revenue that’ll run you through all your tax issues so you can address any concerns.
For the full list of government departments, agencies and organisations offering advice and support, check out Business support in New Zealand (IR1010).