Register your business in New Zealand

Businesses in New Zealand generally use one of these structures:
  • Sole trader
  • Partnership
  • Limited liability company
  • Publicly listed companies
  • Sole trader

    A sole trader operates a business on their own. The trader controls, manages and owns the business and is entitled to all profits but is also personally liable for all business taxes and debts.

    Usually a sole trader can establish the business without following any formal or legal processes and can employ other people to help run the business.

    Many New Zealand businesses start as sole traders and then progress to a company structure as the business grows. Others form companies right from the start to take advantage of the protection and other benefits offered by the company structure.

    Partnership

    Partnerships are most common among professional people and in the farming industry. This type of structure can be an effective way to share business operation costs where, for example, several professional people operate out of a joint office.

    Many partnerships are established with a formal partnership agreement. 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.

    Once the automatic option for professional people such as lawyers, doctors and accountants, partnerships are no longer as popular. This is because professionals can now adopt a company structure and may offer better protection.

    A well thought-out partnership agreement is essential to cover contingencies and possible conflicts. No registration is required to start a partnership.

    Limited liability company

    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’.

    In New Zealand, you can register (incorporate) a company online through the Companies Office. There is a small fee, currently NZ$150.

    The limited liability company has proven to be the most popular and successful form of business structure in New Zealand. It has the advantage of helping foster confidence in the businesses 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.

    Publicly listed companies

    The New Zealand Stock Exchange operates two markets where public companies can list shares. The NZSX market has more than 200 listed issuers including many of New Zealand's long-established heritage companies. NXT is a new, streamlined market targeted at small to mid-sized businesses whose growth potential may be constrained by a lack of expansion capital. Companies seeking to list on either exchange need to meet NZX Listing Rules.



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