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Before you start a new business in New Zealand, it is crucial to research your market and size up your competition, as well as to develop your unique selling proposition. If you can clearly explain how you will be able to solve a problem for your potential customers, you are more likely to be able to convince other people to fund your venture or buy your products or services. 

Trying to commercialise a business idea can be daunting. However, New Zealand is often the perfect environment to user-test the viability of your idea. It is a small market with an educated population, receptive to technology and well connected.

This article will discuss:

  • the various steps you need to take to start a business in New Zealand;
  • some of your legal and tax obligations; and
  • how to access free resources to help you get things off the ground.

Test Your Business Idea

If you have not started already, drafting a business plan can help you decide if your idea is viable or not. As part of this process, you will: 

  • analyse the market and your competition; 
  • define your unique selling point; and
  • crunch your numbers.

When it comes to creating your business plan, there is not a one-size-fits-all formula. You can use a document or a business canvas for a more visual representation. 

A SWOT analysis can help you identify the internal and external factors affecting your business. SWOT stands for your:

  • strengths;
  • weaknesses;
  • opportunities; and
  • threats.

You can also access useful tools and statistics for your research on the Data for Business website developed by Stats NZ

There is plenty of help available to entrepreneurs looking to start a new venture in New Zealand, including:

  • free advice;
  • resources;
  • mentors; and
  • grants.

An experienced business advisor or a mentor can help you review your business plan and offer feedback and recommendations to improve it.

To access these resources, start by registering with your local Regional Business Partner Network. A local business advisor can explain what types of assistance you might be eligible for and introduce you to valuable business networks.

Choose a Name and Protect It

Choosing on a name for your business can be an important decision, especially if you are planning to build your brand around it. The key to selecting a successful name is to: 

  • keep it simple and clear;
  • while still allowing you to stand out from the crowd; and
  • somehow explain what you do as a business.

Once you have chosen a name, test it with other people and check whether it is available before you settle on it. You can do this by conducting a quick search on ONECheck. This free service also allows you to reserve your:

  • web domain;
  • trademark; and 
  • social media usernames if they are available.

Your name (and brand) are valuable assets for your business, so it is a good idea to protect them, especially if you have plans to expand your operations in the future. You can do this by registering a trade mark with IPONZ. Before doing so, make sure you weigh up the advantages and disadvantages of registration, for example that:

  • you can protect your words, logos, shapes, colours, sounds, smells or any combination of these;
  • you pay a small fee that covers you for ten years (at which point you would need to renew); and
  • it is a fairly lengthy process (it takes a minimum of six months).

When you incorporate a company, your name will be protected to a certain extent when you register it with the Companies Office. After this, no other companies can use the same or similar name to yours. However, doing this does not grant your business automatic trade mark rights.

Before applying for a trade mark, it is a good idea to get a search and preliminary advice (SPA) report on the IPONZ website.

Choose a Business Structure 

There are many available business structures, but Kiwis prefer to structure their businesses as:

  • sole traders;
  • partnerships; or 
  • companies.  

As a sole trader, you are flying solo. This is the easiest and cheapest structure to set up, which appeals to many small business owners who:

  • run a trade;
  • consultancy business; or 
  • want to turn their passion into a financially viable operation.

However, it also has some disadvantages, so make sure you include these in your decision making.

Unlike sole traders, partners share the responsibilities and costs of owning and running the partnership. When you have a business partner, you can share the load of managing the day-to-day operations and decision making. This structure appeals to businesses in the legal, financial services and farming industries. 

In a company structure, your business is a ‘legal person’, and it is separate from its shareholders (you). This means, among other things, that the company owns the assets and liabilities of the business and is responsible for any debts. In most instances, companies are the most complicated and expensive structure to set up. This is because you have to register and maintain records with both the New Zealand Companies Office and Inland Revenue, and they are subject to stricter tax and legal regulations.  

Register Your Business

If you decide to operate as a sole trader, general partnership or trust, you can register your business and get a New Zealand Business Number (NZBN) for free on the NZBN website. This unique identifier for your business will allow you to interact more seamlessly with other businesses and government agencies.

When you incorporate a new company or limited partnership in New Zealand, you need to register with the Companies Office. There is a cost associated with this. Companies get assigned an NZBN automatically as part of their registration process. 

Consider Regulations and Tax Implications   

There are different ways to set up your business, each with varying tax obligations and subject to specific regulations depending on the industry. Before deciding how to structure your business, it is a good idea to consult a business structuring lawyer or accountant to help you weigh up the advantages and disadvantages of each option. 

For example, some of your essential tax responsibilities may include: 

  • getting an IRD number;
  • completing financial accounts and various tax returns each year;
  • making certain deductions from your employees’ salaries (PAYE, student loan, child support and (or) KiwiSaver) and paying these to IRD; 
  • working out whether you have to pay provisional tax during the year;
  • if your turnover is over $60,000, you may have to register for GST; and
  • if you are a sole trader, you have to pay your student loan repayments directly to IRD.

Note that these can change with changes in government policy, so always cross-check these with the Inland Revenue website.

There are other industry-specific regulations that you may need to get familiar with as part of setting up your new business in New Zealand. These include your obligations around:

  • fair trading;
  • privacy; and
  • health and safety.

You can use business.govt.nz’s Compliance Matters tool to search for central government regulations that may apply to your business or industry.

Key Takeaways

From testing your idea to protecting your IP, there are several essential things to do when you start a business in New Zealand. These include: 

  • creating a business plan to help you validate your business idea; 
  • signing up with your local Regional Business Partner Network;
  • conducting a thorough check before settling on a name for your business; 
  • protecting your name and brand by registering your trade mark;
  • deciding on a business structure and registering your business;
  • getting an IRD number for your business; and
  • researching whether you need to comply with other industry-specific regulations. 

If you need help with the legalities of getting your business off the ground, contact LegalVision’s business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

How do I start my own business from scratch?

To start your own business from scratch you need to conduct some market research and create a business plan. You then have to choose your business name and legal structure. This step requires careful consideration as it determines some of your legal and tax obligations. If you are expecting to make over NZ$60,000, you may need to register for GST, and if you are planning to hire staff, you need to register as an employer with Inland Revenue. You should work with a lawyer and (or) accountant in the initial stages of setting up your business, as they can help you understand your legal and tax obligations to make sure you do not miss anything. 

Can you start a business with no experience?

There is a first time for everything, including starting your own business. The success of your business does not necessarily depend on your entrepreneurial experience but rather on having a strong business plan and support network around you to help you implement your strategy. You should sign up with with your local Regional Business Partner Network to find out if you are eligible for free mentoring and government grants.

How do I write a startup business plan?

A business plan typically includes an analysis of your target market and competition, and it defines your value proposition. It explains your strategy and how to implement it and includes a financial analysis to demonstrate the profitability of your idea. You can write a business plan using a canvas or document. The New Zealand government offers free templates for download on the business.govt.nz website.

What is the best time to start a business?

There is no perfect timing to start your business. If you have created your business plan, set up your website and (or) found some investors, this is likely to be a good time to take the leap. There are a few signs that you are ready to start, including when you have generated some sales, buzz or honed in on the best idea.

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