13/02/2023 · Last update: 02/09/2024

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A Guide To Starting A Business NZ: What It Costs To Get Started, Where To Find Help, And More

 

When it comes to starting a business, NZ’s aspiring entrepreneurs can feel like it’s both a daunting and exciting prospect. This article will guide you on the costs associated with setting up shop in New Zealand 🇳🇿, as well as where to find help and resources so that you can get your venture off the ground successfully! 💪

Introduction

New Zealand is a great place to start a business, and test it before you take it to the rest of the 🌏. Not everyone has those aspirations, but NZ is an easy place to get started and a reflection of how consumers buy in the western world. There are plenty of resources out there to get you on your feet, but more importantly, Kiwi’s love to support someone giving it their best. The Kiwi spirit often transpires into some of the greatest entrepreneurial stories one could hope for! 🌿

Here are a few things to keep in mind when starting your business in New Zealand:

1. The cost of living in New Zealand (Not Auckland) is relatively low compared to other developed countries. This means that your start-up costs will be lower as well! 👏

2. There are plenty of resources available to help you get started, including the NZTE (New Zealand Trade and Enterprise) website and the Ministry of Business, Innovation and Employment website.

3. It is important to raise your financial literacy and the tax obligations you have. It might seem like a foreign language to begin with, but take this seriously, because no-one (Including accountants) care about your money as much as you do. Read books, starting with Rich Dad, Poor Dad.

4. New Zealand has a favourable tax environment for businesses, with some of the lowest corporate tax rates in the world. For more information on this, go to the Inland Revenue website.

5. There are plenty of networking and support groups available for businesses in New Zealand. These can be a great way to meet other like-minded entrepreneurs and get advice and support. 🤝

6. There’s no minimum capital required to start a company in New Zealand. In the Netherlands, you must have 45,000 Euros, just to open a business.

That said, opening a business isn’t for the fainthearted. It’s tough, so don’t do it unless you’re 100% committed.

How Much Does It Cost to Register a Business in New Zealand?

Starting a business in New Zealand can be a relatively easy and low-cost process, especially when compared to other countries. The government has put in place a number of initiatives to encourage entrepreneurship and there are plenty of resources available to help you get started.

The cost of setting up a business in New Zealand will depend on a number of factors, including the type of business you want to set up, the size and location of your business, and whether you need to register for GST. Generally speaking, you can expect to pay around $1,000 to set up a small business in New Zealand, including registering a company name ($10+GST), incorporation ($118.74). You can do this through the New Zealand Companies Registrar.

One of the biggest costs associated with starting a business is finding the right premises, but in this day and age, who needs an office? 💻If you are, in fact, planning on renting or leasing commercial space, you should factor in the cost of rent, utilities, insurance, signage and any fit-out or renovation costs. Don’t rush into these costs when starting. Protect your cash-flow at all costs as fixed overheads are what commonly drowns businesses. What you can do however, is ask suppliers to contribute to signage costs, or fit out if you have enough clout with them.

Another significant cost associated with starting a business is marketing and advertising. You’ll need to budget for things like website design ($5,000-$10,000), online advertising ($1000 per month), An Agency to run your advertising ($2000 per month), print advertising, and signage.

Of course, there are also general business costs that need to be considered when starting any new venture. These include things like office supplies, accounting software ($70 per month), insurance, and licenses or permits required by your local council.

Where to Find Help with Starting a Business in NZ

Get your accountant involved early. The best accountants are those who push the boundaries, but never cross them 👍. Evaluate your accountant on their risk-factor. If they run a larger firm, you’ll find safety in compliance.

Your accountant can help you choose between different business structures available. It is important to choose one that will work best for you. A company has completely different obligations, rules and loopholes in comparison to a partnership, or sole trader. Choose wisely.

Once you have chosen a business structure, you need to register your business with the Companies Office. This can be done online or through a paper application. You will need to provide some basic information about your business, such as its name, address, and contact details. You will also need to choose a registered office address and appoint a director for your company.

After your company has been registered, you need to apply for a Business Licence from the New Zealand Government. This licence allows you to operate your business and ensures that you comply with all the relevant laws and regulations. Once you have been granted a Business Licence, you can start operating your business.

If this all seems too hard to D.I.Y, then leave it to your accountant 🧑‍💼.

Start-up companies often use consultants or mentors to help them. Banks may also offer specialised support for new businesses, so it is worth talking to your bank about what services they can offer you.

Types of Business Structures Available in New Zealand

There are four main types of business structures available in New Zealand: sole traders, partnerships, companies, and trusts. Each has its own advantages and disadvantages, so it’s important to choose the right one for your business.

💼 Sole Traders

Sole traders are the simplest and most common type of business structure in New Zealand. They’re easy to set up and you have complete control over your business. However, you’re also personally liable for all debts and losses incurred by your business.

💼 Partnerships

Partnerships are similar to sole traders, but involve two or more people. You’ll need to have a partnership agreement in place that sets out each partner’s rights and responsibilities. Like sole traders, partners are personally liable for all debts and losses incurred by the business.

💼 Companies

Companies are separate legal entities from their owners (shareholders). This means that shareholders aren’t personally liable for the company’s debts and losses – only the company itself is responsible. Companies can be either registered or unregistered. Unregistered companies are less common and have fewer protections under the law.

💼 Trusts

Trusts are a more complex structure that can be used for a variety of purposes, including asset protection and tax minimisation. Trusts can be either express trusts or implied trusts. Express trusts are created by a written trust deed, while implied trusts arise from the actions of the parties involved (for example, when one person transfers property to another with the intention of creating a trust).

The Benefits of Starting a Business NZ

New Zealand is a great place to start a business. The cost of living is relatively low, and there are plenty of resources available to help you get started. There are also a number of tax benefits 💸 and incentives available to businesses in New Zealand. Here are some of the main benefits of starting a business in New Zealand:

✅ Tax benefits and incentives

There are a number of tax benefits and incentives available to businesses in New Zealand. This includes the research & development tax credit, which can refund up to 33% of eligible R&D expenditure back to businesses. There are also a number of grants and subsidies available for businesses undertaking certain activities or operating in certain sectors.

✅ Stable political environment

New Zealand has a stable political environment, which provides certainty for businesses planning for the long term. The country has strong institutions and a well-developed legal system, which provides an ideal platform for doing business.

✅ Access to markets

New Zealand offers access to markets across Asia.

Taxation and Compliance Considerations

Many people are surprised to learn that there is no capital gains tax in New Zealand. This means that any profits you make from selling your business will be completely tax-free. However, there are still a number of other taxes that you need to be aware of when starting a business in New Zealand.

Income tax is the main tax that you will need to pay as a business owner. The good news is that the corporate tax rate in New Zealand is only 30%, which is relatively low compared to other countries. You will also need to pay GST (Goods and Services Tax) on any products or services that you sell. The current GST rate is 15%.

If you are planning on hiring staff, then you will also need to pay PAYE (Pay As You Earn), which is a deduction from your employees’ wages for income tax. The current PAYE rate is 12.5%.

There are a number of compliance requirements that businesses need to meet in New Zealand. These include keeping accurate financial records, filing annual returns, and paying taxes on time. Failure to comply with these requirements can result in hefty fines or even imprisonment. This is where your trusty accountant comes in! Both a good accountant and lawyer are worth their weight in gold! 👑

Government Support for Startups and Small Businesses

If you’re thinking of starting a business in New Zealand, you’ll be glad to know that the government is very supportive of small businesses and startups. There are a number of programs and initiatives in place to help new businesses get started and grow.

One of the most important things for any startup is access to funding 💵. The government has a number of schemes in place to help startups access business finance, including loans, grants, and equity investment.

The government also offers a range of tax incentives for businesses, including research and development tax credits, accelerated depreciation, and capital gains tax exemptions. These can save your business a significant amount of money and make it more competitive. Many accountants are also licensed tax advisors so when hiring consider killing two birds with one stone!

There are also a number of free or low-cost business support services available from the government, including advice on starting your business, mentoring, and networking opportunities. These can be extremely valuable when you’re first getting started.

So if you’re considering starting a business in New Zealand, be sure to take advantage of all the support that’s available from the government. With the right help and advice, you can give your startup the best chance of success 🏆.

Financing Options for Starting Your Own Business

Starting a business NZ wide can be costly depending on your business activities and offerings. Luckily, there are a number of financing options available to those looking to start a business in New Zealand. The first is through the government’s Small Business Finance Scheme, which offers loans of up to $100,000 for new businesses but this is no easy feat to get awarded, and often the red-tape associated with jumping through a series of hoops outweighs the benefit.

There are also a number of private lenders, like Quickloans who offer business loans and banks offering lines of credit specifically for small businesses. Additionally, many banks offer business banking products with competitive rates and terms. Finally, there are a number of online crowdfunding platforms that can be used to raise funds from the general public.

Hidden Costs in Starting a Business

When you’re starting a business, it’s important to be aware of all the costs involved. Many people focus on the initial investment and don’t consider the ongoing costs. This can lead to financial problems down the road.

Some of the hidden costs in starting a business include:

1. Licenses and permits 🪪: You may need to get several licenses and permits before you can start operating. The cost of these can add up quickly.

2. Insurance ⛑️: You’ll need to get insurance for your business. This can be expensive, especially if you’re in a high-risk industry.

3. Office space ✏️: If you’re not working from home, you’ll need to rent or buy office space. This is another ongoing cost that can add up quickly.

4. Provisional Tax 💸: Ask your accountant how provisional tax works. Don’t get caught out not being able to pay your tax bill in your second year of business.

5. Equipment ⚙️: You’ll need to buy or lease equipment for your business. This can be costly, especially if you need specialized equipment.

6. Inventory 📊: If you sell products, you’ll need to stock inventory. This can be expensive, especially if you have a lot of products or unique items.

7. Advertising and marketing 🌟: You’ll need to spend money on advertising and marketing to promote your business. Digital marketing is not magic, so assume a minimum of a 6-month calibration period until they find the winning formula.

Keeping on Top of Your New Business

A great resource to keep ontop of all things New Zealand business is New Zealand Companies Office. They offer insights and articles including law changes and having a transparent view on the number of companies currently registered.

Conclusion

Starting a business in New Zealand can be a daunting task, but with the right knowledge and help it can also be very rewarding. With an understanding of what it costs to start up, where to find the necessary help, and other helpful tips, you’ll have all the information you need to get started. If you still feel overwhelmed by this process, there are many resources available that can provide additional support and guidance. We hope this guide has helped give you confidence in taking the first step towards starting your own business in New Zealand and if you’re looking for a finance partner, please reach out to QuickLoans for further details.