Guide to Setting Up a Sole Proprietorship in New Zealand

New Zealand is one of the most convenient places in the world to set up a business. As per the World Bank Ease of Doing Business report 2020, New Zealand ranks in the top position out of 190 economies in terms of starting a business. 

The country is well-reputed internationally for its openness towards trade.. Moreover, the country is reportedly corruption free which encourages foreign investments. English is the primary language of business and communication, making it further attractive to foreign investors.

One of the most straightforward ways to enter the  New Zealand market is to establish a sole proprietorship. The processing is quick, and all compliances are easy to adhere to.

Setting up a sole proprietorship in New Zealand is the right step for companies looking to expand any business globally. Here is a guide on how to register a sole proprietorship in New Zealand with further details.

Who can be a Sole Proprietor in New Zealand 

Any individual with a business plan can set up a sole proprietorship in New Zealand. This corporation is operated by a single person trading with or without additional staff. Immediate family members can be employed in such a setup too.

A sole proprietorship in New Zealand is not a specifically separate legal entity. It is just an extension of the owner. There are no hard-core eligibility requisites for becoming a sole proprietor in New Zealand except for some rules related to visas and work visas for hiring staff under such a setup.

Benefits of Sole Proprietorship in New Zealand

Independent consultants, service providers, and entrepreneurs choose to settle in with a sole proprietorship in New Zealand. The top benefits of a sole proprietorship are-

• Lesser hassles involved in comparison to setting up a full-blown company
• No capital requisites
• Quick processing times
• Ease of filing taxes
• No secondary-party interference
• Access to complete profits

Documents Required for Registering Your Business in New Zealand

The documents needed to register a sole proprietorship in New Zealand are as follows: 

• New Zealand business ID
• Completion of incorporation form 
• Approved business name
• Documents proving the identity of the entrepreneur
• Valid visa to work in the country except in case of Australian citizens
• IRD number or individual identification number for tax payments
• Documentation of local bank account

Other Criteria for Registering a Sole Proprietorship in New Zealand

Building up a sole proprietorship in New Zealand is a process wherein proprietors must consider the following points:

• Draft up the business plan for visa approval purposes
• Maintain local bank account for business purposes
• Register with the Goods and Service Tax or GST, as and if applicable

Post-registration compliances

Once the proprietorship is established, ensure a few things to enjoy a smooth continuance of business activity.

• Tax registrations and timely income tax filings
• Obtaining applicable permits or licenses in line with your business activity
• Ensure that your intellectual property safeguards are in place, in terms of patents or trademarks, depending on what is applicable
• As a sole proprietor in New Zealand, you must read up on rules related to anti-money-laundering

Taxation

The list of the primary taxes for an entity in New Zealand are-

• GST (a form of VAT) at 15% when your annual income is expected to be over NZD 60,000. If it is less, registration for GST is voluntary.
• Income tax of a progressive rate as per below slab-

How to Register a Sole Proprietorship Firm in New Zealand?

To register a sole proprietorship in New Zealand, you can refer to these steps to get the same registered-

Step 1-Visa fulfillment

Apply for a resident visa or an entrepreneur visa.

Entrepreneurial type- The same comes in two specific kinds.

• The New Zealand government offers a six-month visa grant if an entrepreneur is setting sights on a business launch.
• The other type is a full-fledged entrepreneur visa, applicable to businesses having good growth in the country. With this visa, you may stay here for up to two years. Such businesses will be granted a visa if the working capital is at least NZ$ 100,000. It must have at least 120 points in terms of the grading system for businesses in New Zealand. Additionally, there must be no evidence of business fraud or closure.

Residential type- The residential visa is of two types too.

• The first is for six months in terms of validity, and the other is for two years.
• The first type of visa is granted if your business firm or proprietorship is of NZ$ 500,000 value and has a minimum of three jobs (permanent basis) linked to locals. The second visa requires stringent rule fulfillment, incorporating health tests and character and language-related tests.

Step 2: Naming the business

• Choose a name for your business and use the ONECheck tool available from the NZ government to ensure that the name is unique. The tool also gives you name suggestions.
• The next step is reserving the chosen name with the Companies Office.

Step 3: RealMe log-in

• Create an account on RealMe. This is used across several agencies in the country. 
• You will need the credentials for using the same for permit applications, name registration, and Inland Revenue-related account management.

Step 4: Local banking account

• This helps you stay aware of personal and business transactions and eases tax filings.
• Each bank might have specific documentation needs for opening a bank account.

Step 5: Legal obligations

• The first step under this category is obtaining the NZBN or New Zealand Business Number. Once you register your sole proprietorship in New Zealand, you will obtain a code that serves as a means of identification and sharing of info across companies in New Zealand.
• The next step is safeguarding your brand name and logo with trademarks. You can also reserve a domain name for business use.
• Depending on where you are operating in New Zealand, applying for all relevant local permits for business is important.
• If your annual earnings from the sole proprietorship are above NZ$60,000, you must register with the Inland Revenue Department for GST.

Conclusion

A sole proprietorship in New Zealand comes with no excessive requirements for registration and operation. Research the country’s opportunities for your area of interest before setting sights on a sole proprietorship in New Zealand.  

As you operate and begin to hire in New Zealand, payroll management could be a challenge. This is when you can seek help from Multiplier. It is a global employment solution available for sole proprietors. It offers EOR solutions to ease the recruitment and management processes of operating even with employees.