Business Basics in New Zealand — Registration, Tax & Responsibilities
Starting or running a business can involve a lot of new words, registrations, responsibilities and important dates. You do not need to understand everything at once.
This guide provides a practical starting point for understanding some of the main things New Zealand business owners and self-employed people may need to think about.
Where Would You Like to Start?
Start by Understanding How Your Business Is Set Up
One of the first things to understand is what type of business structure you are using. Your structure can affect how your business is taxed and what responsibilities you have.
Sole Trader
You are generally running the business as an individual and report business income through your individual tax arrangements.
Partnership
Two or more people may operate a business together. Partnerships have their own tax and record-keeping considerations.
Company
A company is a separate legal entity and has additional registration and ongoing responsibilities.
There is no single business structure that is right for everyone. Consider your circumstances and get professional advice if you are unsure which structure is appropriate.
Understanding Your Main Business Identifiers
Several online services can make it easier to interact with government agencies and manage your business information.
NZBN
The New Zealand Business Number is a unique identifier available to New Zealand businesses. Companies receive one automatically, while eligible sole traders, partnerships and trusts can apply for one.
RealMe
RealMe can provide secure access to a range of New Zealand government services.
myIR
Inland Revenue's myIR service can be used to manage tax information and file relevant business returns, including GST where applicable.
Keep your important business details, login information and records organised somewhere secure so you can find them when you need them.
Understanding Business Tax
Tax can feel complicated, especially when you are new to business. You do not need to become a tax expert, but understanding the basics can help you prepare and know when to ask for help.
Income Tax
Income tax can apply to money earned through business activities. How income is taxed depends on factors such as your business structure and circumstances.
Provisional Tax
Some businesses may need to pay income tax in instalments during the year rather than waiting for one larger payment.
Records
Keep accurate financial records such as invoices, receipts, banking information and other relevant business records.
ACC Levies
Businesses and workers can have ACC levy responsibilities. The amount depends on factors such as the type of work and liable income.
Current Business.govt.nz guidance says businesses must keep accurate financial records and generally retain them for seven years.
What Is GST?
Goods and services tax, commonly called GST, is added to the price of most taxable products and services.
New Zealand's standard GST rate
If you are GST registered, you generally charge GST on taxable sales and can claim eligible GST on business purchases.
When Registration May Be Required
You generally need to register when you expect your taxable turnover to exceed $60,000 in a 12-month period. There are also circumstances where voluntary registration may be possible.
GST Returns
Once registered, you need to file GST returns and account for GST according to your taxable period and accounting basis.
Keep Your GST Records
Keep invoices, receipts and other records needed to support your GST returns and claims.
If you charge GST, remember that you are collecting it for the government. Plan ahead for your GST obligations rather than treating the GST portion as money available to spend.
Companies Have Additional Responsibilities
If you choose to operate through a company, there are additional registration and ongoing obligations to understand.
Check Your Business Name
Check whether the name you want is available and consider protecting your intellectual property where appropriate.
Reserve the Company Name
A company name can be reserved through the Companies Office as part of the incorporation process.
Register the Company
Companies must be registered with the Companies Office. Registered companies receive an NZBN.
Keep Company Details Current
Companies have ongoing filing and information requirements, including annual returns.
You do not have to decide based on what another business is doing. Consider your circumstances and speak with an accountant or other qualified adviser if you need help choosing a structure.
My Business Responsibility Checklist
You can use this as a general reminder list. Your exact responsibilities will depend on your business and circumstances.
Additional employer responsibilities can apply, including employment-related tax and payroll obligations. Follow the relevant Inland Revenue and employment guidance.
You Don't Have to Remember Everything at Once
Different companions can help you approach different parts of running a business.
BEE
What Do I Need to Keep Track Of?
Busy Bee can help you break business responsibilities into manageable steps.
CAT
Let's Break It Down
Checklist Cat can help turn a large responsibility into smaller tasks that are easier to follow.
FOX
Where Can I Find an Answer?
Finn Fox can help you think through problems and find the next useful place to look for information or support.
Getting Help Is Part of Running a Business
You do not need to know everything yourself. Asking for help can be a responsible business decision.
Accountant
An accountant may be able to help with financial records, tax planning and business decisions.
Bookkeeper
A bookkeeper can help with organising and maintaining financial records.
Business Mentor
A mentor can provide guidance around business planning, decisions and growth.
Government Services
Official agencies can provide current information about registration, tax and business obligations.
Useful Places to Check Current Information
Aspie Answers helps make information easier to understand, but official agencies should be used for the current rules and requirements.
What Should I Take Away?
My business structure can affect my responsibilities.
NZBN, RealMe and myIR can help me manage business interactions and information.
I need to understand the tax responsibilities that apply to me.
GST has specific registration and reporting requirements.
Good record keeping is an important part of running a business.
Asking for professional or official help is okay.
What Do I Need to Do Next?
You do not need to complete everything today. Choose one useful next step.
You Don't Have to Know Everything to Get Started
Business responsibilities can take time to understand. Start with the information that applies to you, keep your records organised and ask for help when you need it.
One clear step at a time is still progress.