Starting a business
If you¡¯re considering starting or buying a business, New Zealand is an excellent choice.
We’re the easiest country in the world to do business in, according to the 2016 World Bank Doing Business survey. They also rate us the easiest place in the world to start a business.
There are few restrictions on establishing, owning and operating a business here. In fact, by using the Government's online portals, the process of reserving a name and incorporating your company can be completed in a matter of hours.
Businesses in New Zealand generally use one of these three structures - Sole trader, Partnership, or Limited Liability.
Partnerships are most common for professional people and in the farming industry. Partnerships can be an effective way to share business operation costs where, for example, several professional people work out of a joint office. The partnership itself does not pay income tax. Instead it distributes the partnership income to the partners. The partners then pay tax on their own share.
Many partnerships are established with a formal partnership agreement. It must be well thought-out to cover all contingencies and possible conflicts. No registration is required to start a partnership. Partnerships were once the automatic option for lawyers, doctors, accountants and other professionals. Today however partnerships are not as popular because professionals can now opt for a company structure which may offer better protection.
A company is a formal and legal entity in its own right and separate from its shareholders or owners. Shareholders' liability for losses is limited to their share of ownership of the company. This does not apply when company directors have given personal guarantees for company debts, where a company has been trading while insolvent or is considered to be ‘trading recklessly’.
The limited liability company is New Zealand’s most successful business structure. It fosters confidence in the business by governing the relationships between investors/shareholders, directors and creditors and by giving customers, investors and other stakeholders a clearer picture of who and what they are dealing with. In New Zealand, you can register (incorporate) a company online through the Companies Office. There is a small fee, currently NZ$150.
Other start-up issues
As well as establishing the structure of your business, there are several other issues you’ll need to consider.
Sourcing market information
Obviously you’ll want to know as much as you can about the market and opportunities for your business. Statistics New Zealand has a wide range of online information tables and tools that can help.
Check local authority rules
Before setting up with premises, check with your local council. Each territorial authority has its own rules and regulations about what business activity is allowed in different areas. For instance, it is unlikely that you’d be able to run an automotive repair business in a residential area.
Set up tax numbers
Depending on the business structure you use, you will either need individual tax numbers or a company tax number. For more information visit Inland Revenue.
Get a lawyer, accountant and bank
Any New Zealand bank can help you with setting up bank accounts for business purposes, and many can also help you with transferring funds from overseas and other specialist migrants’ services. You may also want to seek legal and financial advice.
Check your business name
To learn more about starting or buying a business in New Zealand visit business.govt.nz.