Sole trading is unique
Being a sole trader is a different type of business because you don’t need to set up as a legal company. But you do need to let Inland Revenue know, and have a personal IRD number.
You get to choose your own business name and logo, and decide how you communicate your products or services. The choices you make will shape people's perceptions of your business.
Find out more about what you need to think about and do to become a sole trader.
Weighing up the pros and cons
As a sole trader, you’re an important part of the New Zealand economy. A lot of people are sole traders, including:
- contractors
- tradies
- small business owners
- artists and craftspeople.
There are advantages and disadvantages to being a sole trader. For example, you make all the decisions and keep all the profits.
But you might prefer to share business risk, bounce ideas off colleagues, or be eligible for things like sick leave.
Talk to people in your industry to find out if sole trading is right for you.
You do your taxes
As a sole trader, you’re also in charge of calculating and paying your own taxes every year.
This means you’ll need to understand how the tax system applies to your business and plan ahead to avoid surprises.
The amount of tax you pay will depend on things like what industry you work in and how much you earn.
As well as income tax, you’ll be responsible for paying ACC levies and GST, if appropriate.
Paying your first-year tax accurately can get you a discount so it’s important to get this right.
You can get help by using accounting software or hiring an accountant or bookkeeper.
Find out more in our tax guide for sole traders.
What's next
Starting a business
Growing your business
Maintaining your business
Dealing with tough times
Selling, closing, or stepping away
Company
Partnership
Contractor
Social enterprise (doing business for good)
Other business structures