The basics for starting a business in NZ
Are you about to make your dream come true by going into business for yourself? If so, here’s a quick guide to getting started and putting your enterprise on the road to success.
Make sure your business idea matches a market need
If your business idea is connected to a personal passion, you need to make sure it’s also connected to market demand. In other words, for your business to be successful it needs to be feasible. Use a business plan template to see how your idea shapes up. If it looks like your business idea won’t fly, keep adjusting the plan until it fits a known market niche.
Choose your brand or company name
The name for your business should be memorable and unique. By unique, we mean it shouldn’t be a name that’s already in the market. The NZ government has made the name choosing process easier with their OneCheck tool. It will show you whether your name idea is being used, whether it’s similar to other names in the market, whether you can get the web domain and other things you need to know. It won’t generate name ideas for you though, but there are lots of other websites that will.
Decide on a business structure
If you’re starting from scratch, you need to decide whether you want to be a sole trader, a partnership or a company. There are pros and cons for each of these, so it’s smart to talk to an accountant before you decide.
- A sole trader is someone who starts in business on their own without registering as a company. Many small business owners begin as sole traders because it’s the cheapest and easiest option.
- A partnership is when two or more people form a business together. In a partnership agreement, partners set out how they’ll share profits, debts and work.
- A company has directors and shareholders who are responsible for paying the company’s debts. They’re also entitled to a share in the company’s profits. Companies must file annual returns with both the Companies Office and Inland Revenue.
Register your company name
If you go the company way, you’ll need to register with the government. The result will be an NZBN (New Zealand Business Number). Your NZBN links to the information others need to work with you, like your trading name, phone number or email. Sole traders and partnerships can also register for an NZBN. While it’s not compulsory, it’s free so you might as well do it.
Before you register your company, it’s a smart idea to get RealMe, which makes it easy to prove who you are. You can use RealMe to log into a number of NZ government sites and services. Some organisations need only a RealMe login; for others you need to set up a RealMe verified identity.
Register your domain name
These days, if you don’t have a website you may as well not be in business. Even if you don’t need an e-commerce site, you will need a brochure-style site that gives you credibility. Potential customers can check you out to make sure you’re the real deal and your site can passively market your products or services while you’re busy working. There are various ways to secure a domain name – search on ‘nz domain name’ and they’ll all pop up. Prices can vary, so it pays to shop around.
Most New Zealand businesses opt to get a .co.nz domain, but you can also look for .kiwi, .nz, .net.nz or one of the other new extensions. If you’re thinking your business might be global one day, a .com domain could be the best choice.
Get a trade mark if you need it
If you’ve developed a product or service that is unique in some way, you might want to get your intellectual property protected by a trade mark. First step towards this is to get a search and preliminary advice (SPA) report from the Intellectual Property Office (IPONZ). This report isn’t expensive and you should have it within a week. It doesn’t cost anything to search the trade mark registry on the IPONZ site. A RealMe login will streamline the process.
Read up on the laws that are relevant to your business
Depending on the nature of your business, you’ll need to understand a variety of legislations - the Fair Trading Act, Consumer Guarantees Act, Health and Safety Act, and maybe the Food Act if you plan to make or sell food. A Google search will help you to learn about these laws; just make sure you’re learning from a reputable website.
It’s also worth ensuring that you plan for the right level of business insurance. Whether you’re starting a new venture or growing your business, AMI offers tailored insurance options to help keep your business flourishing. More information: https://www.ami.co.nz/business
Get registered for GST
If you’re sure your business will earn you more than NZ$60,000 a year, you will need to register for GST.
You can do this at the same time as you register your company. If you’re not planning to become a company, just go to ird.govt.nz.
Open a bank account that’s just for business
Life (and accounting) gets complicated when your personal banking is all mixed in with your business banking. You can avoid a lot of confusion by opening a bank account that’s just for business income and outgo.
Find an accounting platform
It’ll be easier to manage the financial life of your new business if you use a cloud accounting platform, such as Xero or MYOB. Your platform will be linked to your business bank account and you should get into the habit of reconciling income and expenses every day. If you’re not confident with accounting, the easy way to get started is to find an accountant who works with the platform you’re interested in.
Learn how to be an employer
If you are going to hire people to bring your business to life, there are a number of things you need to do. Firstly, you need to register as an employer with the IRD. Then you need to work out what types of employees you need, i.e. fixed term, contractor, unpaid intern, permanent or casual. Each person you hire will need an employment agreement. You can learn all about becoming an employer on the New Zealand government’s business website.