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New Zealand - Self-Employment and Business Start Ups
It is important when you begin your business to inform the Inland Revenue that you are now self employed. This is important for the Accident Cover which is essential. If the ACC are not aware that you are self employed any claims may not be paid out. This will also ensure that the Inland Revenue send you the correct taxation forms at the end of the tax year and that you can claim legitimate business expenses.
A separate bank account is advised even if you are simply setting up as a sole trader on a part-time basis. This is to ensure that accounting is much easier. In order to do this you will need to have a business number from the Inland Revenue. This could be the same as your individual number but this will depend upon the type of business that you have. A business is able to deal with their own tax returns or can hire the services of a bookkeeper or accountant.
If you wish to register as a company you will need to consult with an accountant and a lawyer as they are able to deal with this for you.
If you are expecting your business to turn over $60k or more in a 12 month period then you will need to register for GST. Even if you are not expecting to turn over more than this it is to your advantage to register as you can claim back GST on all legitimate business expenses.
At the current time there is very little help in the way of grants and other funding for small businesses, particularly those that are just starting up. The New Zealand Trade and Enterprise department may have some funding available but this is usually reserved for businesses which are already in existence.
If you are setting up as a sole trader in a profession that should be registered you will still need to do this. Accreditations from professional bodies can only help your business and if you are working in a trade, for example as a plumber or an electrician, you may find that customers will only come to you if you are registered.
Some people may prefer to purchase an existing business. This can be a more complex process than starting your own business when you take into consideration how the business is valued and can take longer to complete than simply starting out yourself as a sole trader. Buyers should also remember to check for existing debt with a company, as once the sale is complete any debt also belongs to the new owner. Most businesses for sale are advertised locally and nationally and it is wise to go through the process with a lawyer.
If you are going to be employing staff you will need to take advice from an accountant to ensure that you have the correct systems in place for PAYE tax obligations. You should also be aware of current employment law and an HR professional or a lawyer will be able to help you with this. All employees should have an employment agreement in place and these will need to be correctly worded and cover all the employment details. The government’s business website has a lot of information on the different issues when starting a business, particularly when employing staff.
It is important to find a reputable accountant and one way to do this is to go directly to the New Zealand Institute of Chartered Accountants. Their website has a search facility which will help you to find a registered accountant locally.
Tel: 0800 377 774
New Zealand Trade and Enterprise (various offices listed on website)
Email: Online enquiry form on website
New Zealand Institute of Chartered Accountants
Level 7, Tower Building
50 Customhouse Quay
PO Box 11342
Tel: 0800 4 NZICA (0800 469 422)
New Zealand Government Business Department
Northern Business Centre
Private Bag 92061
Victoria Street West
Tel: 0800 424 969
Email: online enquiry form on website
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