Starting a business in New Zealand is exciting, but there is a lot to get right before you trade your first dollar. This guide walks you through every step - from testing your idea to making sure you actually get paid - so you can launch with confidence.
This guide is general information for NZ businesses, not legal, tax or financial advice - check with IRD, the Companies Office or a licensed adviser for your situation.
Step 1: Test your idea and niche
Before you spend money on registrations or equipment, make sure people actually want what you are selling. Talk to potential customers, look at what competitors charge, and figure out whether your prices can cover your costs and leave you a living wage.
A simple validation test: can you get your first paying customer before you are fully set up? If someone is willing to hand over money for your service or product, that is a good sign. Write down your idea in a rough business plan template - it does not need to be formal, but it forces you to think through your market, pricing, and costs.
If money is tight right now, also read starting a business with no money for practical ways to keep startup costs low.
Step 2: Choose a business structure
The two most common structures in NZ are sole trader and company. Your choice affects your tax, your liability, and your compliance obligations.
Sole trader - You and the business are the same legal entity. Simple to set up with no registration fee, and you use your personal IRD number for tax. The downside is that you are personally liable if something goes wrong.
Company - A separate legal entity registered with the Companies Office. You get limited liability, meaning your personal assets are generally protected if the business cannot pay its debts. It costs $150 to register and adds compliance obligations like filing annual returns.
Read the full breakdown in sole trader vs company before you decide. If you are starting out on your own and keeping things simple, becoming a sole trader walks you through exactly what you need to do.
Also worth checking: if you work mainly for one client, IRD may consider you an employee rather than a contractor. See contractor vs employee to understand the rules.
Step 3: Register your business
Once you know your structure, make it official.
- IRD number - Every business needs one. Sole traders use their personal IRD number. Companies need a separate IRD number for the business. Apply at ird.govt.nz.
- New Zealand Business Number (NZBN) - A unique identifier that makes it easier for other businesses and government agencies to deal with you. Companies get one automatically on registration. Sole traders can register for free at nzbn.govt.nz.
- Company registration - Register through the Companies Office. It costs $150 and takes about 15 minutes online. You will need at least one director who lives in NZ or Australia, a registered NZ address, and a unique company name.
For more guidance on all things business setup, business.govt.nz has plain-English checklists for every structure.
Step 4: Register for GST (and when you must)
You must register for GST if your turnover exceeds - or you expect it to exceed - $60,000 in any 12-month period. Below that threshold, registration is optional but can be worthwhile if your clients are GST-registered businesses, since they can claim the GST back and your invoices become more competitive.
Once registered, you charge 15% GST on your prices and file returns with IRD - monthly, two-monthly, or six-monthly depending on your turnover. Use the GST calculator to check your numbers before you start invoicing.
For full step-by-step instructions, read the guide to GST registration.
Step 5: Open a business bank account
Mixing personal and business money creates a nightmare at tax time. Open a dedicated business account as soon as possible - ideally before you start trading.
Most NZ banks offer business accounts. Compare fees and check whether the account integrates with accounting software like Xero or MYOB. Some banks offer free accounts for new businesses in the first year, so it is worth asking.
Step 6: Sort your ACC levies
ACC covers work-related injuries for you and your employees. As a self-employed person, you are automatically covered once you start earning, but you need to make sure ACC has your correct details so they can calculate your levies accurately.
Your levies depend on your industry classification and your income. You will receive an invoice from ACC once you are trading - do not ignore it, as unpaid levies add up quickly. If you take on employees, you also pay an employer levy on their wages.
Step 7: Get your business insurance sorted
Insurance is one of the most overlooked steps when starting a business - and one of the most important. One uninsured incident is enough to end a young business before it really gets going. Think about a client's property damaged during a job, tools stolen from your ute overnight, or a customer injured on a site you are responsible for. Without the right cover, you are paying for all of that out of pocket.
Public liability insurance is usually the first policy tradies and service businesses take out. It covers you if you accidentally damage a client's property or injure a third party while working. Many commercial clients and principal contractors will not allow you on site without it.
Tools and equipment cover protects the gear you rely on to earn a living. Replacing stolen or damaged tools without insurance can cost thousands of dollars and put your income on hold.
Professional indemnity is worth considering if you provide advice, plans, or designs as part of your work - it covers you if a client claims your work caused them a financial loss.
Other policies worth thinking about include commercial vehicle insurance, income protection, and employer liability cover if you have staff.
For a closer look at what you could be exposed to, read the risks of running a business uninsured. To understand what policies are available and how they work, see types of business insurance. For guidance on what cover is typical in your specific trade or profession, check out business insurance by profession.
Get quotes early - before you start trading - so you are covered from day one.
Step 8: Set up invoicing, pricing and tools
Getting paid starts with getting your pricing right. Use the charge-out rate calculator to work out what you need to charge per hour to cover your costs, ACC, tax, and still take home a liveable income. Many new business owners underprice themselves early on and then find it hard to raise rates later.
For invoicing, use professional-looking documents that include your business name, IRD number, GST number (if registered), the date, a clear description of work, and your payment terms. The invoice generator makes it easy to produce clean, branded invoices from day one without any accounting software.
Self-employed tax in NZ
As a sole trader, IRD treats your business profit as your personal income - there is no separate company tax return. You pay income tax at the standard personal tax rates on what is left after deducting allowable business expenses (vehicle, tools, phone, home office, and similar costs used for the business). As a company, profit is taxed at the flat company tax rate instead, and you pay yourself separately through wages or dividends.
Most self-employed people in NZ pay provisional tax - estimated tax paid in instalments during the year rather than one lump sum after filing. On top of income tax, budget for ACC levies (based on your industry and income) and GST if you are registered. Set aside a percentage of every payment you receive - many tradies use 25-30% as a starting point - so tax season does not catch you short. Visit ird.govt.nz for current rates, or talk to an accountant to plan your self-employed tax obligations from day one.
Step 9: Plan to get paid on time
Late payment is one of the biggest cash flow problems for small NZ businesses. Set clear payment terms upfront - 7 days is common in the trades, though some businesses use the 20th of the following month for regular clients.
A few habits that help:
- Send invoices the same day you finish the job
- Follow up on overdue invoices within 48 hours - a call or text works better than waiting
- Ask for a deposit on larger jobs before you begin
- Consider charging interest on late payments and include it in your terms upfront
Frequently asked questions
Do I need to form a company or can I just start trading as myself?
You do not need to form a company to start trading in NZ. Many people begin as sole traders using their personal IRD number, which costs nothing to set up. A company gives you limited liability and can look more professional to clients and lenders, but it adds compliance costs and annual return obligations. Read sole trader vs company to decide what suits your situation.
When do I have to register for GST?
You must register for GST when your turnover exceeds - or you expect it to exceed - $60,000 in any 12-month period. Below that threshold, registration is voluntary. Use the GST calculator to track where you stand and understand when you are approaching the threshold.
Do I need an NZBN?
Companies get an NZBN automatically when they register with the Companies Office. Sole traders are not required to have one but can register for free. An NZBN makes it easier for other businesses and government agencies to deal with you, which can speed up client and supplier onboarding.
What insurance does a tradie or service business actually need?
There is no single answer - it depends on your trade, the size of your jobs, and whether you have employees. At a minimum, most tradies should carry public liability insurance, and many clients and contractors require it before allowing you on site. Read types of business insurance and business insurance by profession for guidance specific to your trade.
How much tax will I pay as a new business owner?
See the self-employed tax section above for how sole trader and company tax work, plus what to budget for ACC and GST.