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How to Start a Small Business in New Zealand as a Foreigner

Do you want to start a business in New Zealand as a foreigner? If YES, here is a complete guide plus legal requirements to starting a business in New Zealand. For people wanting to start a new business, New Zealand is a smart choice. New Zealand welcomes business and investor migrants and has taken many steps to make immigration easier for experienced business people and investors. The strong economy and generally light-handed regulatory environment have lead the World Bank to describe New Zealand as “the easiest place on Earth to do business.

According to the 2016 World Bank Doing Business survey, New Zealand is the easiest country to do business in the world. It is also the easiest place in the world to start a business. There are few restrictions on establishing, owning and operating a business here. In fact, by using the Government’s online portals, the process of reserving a name and incorporating your company can be completed in a matter of hours.

New Zealand is a great place for investors and entrepreneurs. The diverse geography and varied culture make for a vibrant and dynamic place to do business. Entrepreneurs” are either self employed or have a hands-on management role in a business they own (either wholly or partly).

In this category, Immigration New Zealand looks for a combination of proven business skills, a strong plan, and accessible funds to finance it. In the language of Immigration New Zealand, an “Investor” is someone with money available to put into a wide range of investment vehicles, from start-ups to bank bonds and much else besides.

But ordinarily they would not be involved in the management or governance of their investment vehicles. There are two levels of investor: Investor and Investor Plus.

Starting a Business in New Zealand as a Foreigner

1. Have a viable business idea

It’s best to be confident that your business idea will work. In order to do this, you should write a thoroughly researched business plan for the business you intend to start.

2. Choose a Business Name and secure the name

You will have to brainstorm for a befitting name for your business. If you already have a name in mind, you should dig around to make sure that the name is not already taken by another business. There are tools on the internet that allow you to see its availability as a business name, trade mark, web domain and social media username, to help you choose a name that you can market and protect.

  • Register a domain name

Get a web address. Low cost, quick and easy. See the Domain Name Commission’s list of authorized registrars.

  • Reserve your company name

If you decide to structure your business as a company, you need to reserve your company name with the Companies Office — it’s low cost, quick and easy. You’ll need a RealMe login. You must use the name to incorporate your company within 20 working days of reserving it.

  • Check for trademarks

Get an initial assessment report from the Intellectual Property Office (IPONZ) before you invest in applying for a registered trade mark. Do this by applying online for a search and preliminary advice (SPA) report on the IPONZ website. It’s low cost, easy and you’ll get it within five days. You can also search the trade mark register for free.

Legal Documents Needed to run a business in New Zealand

  • Commercial agreement

Some simple agreements commonly used by companies in New Zealand are mutual confidentiality agreement, service agreement etc.

  • guidance notes
  • Governance

These documents are designed to help early stage companies get the basics right – simple but company-friendly constitutional documents, share registers and resolutions

  • Intellectual property
  • Fund raising

These documents are intended for use by companies seeking funds from seed investors – they are not intended for use with professional investors (e.g. by angel associations or venture capitalists – who will have their own investment documents). Regardless of the investor, though, some documents will be useful to help a company get investment ready (e.g. the due diligence checklist)

  • Employee share option documents

A set of employee share option documents for use by companies taking advantage of the employee share purchase schemes exclusion under the Financial Markets Conduct Act 2013

  • Employment agreements
  • Website documents

3. Choose a business structure

If you’re a business or self-employed, you can choose the structure that best suits you. The most common are sole trader, partnership or company. Each structure offers various benefits and considerations. Depending on which you choose, you might have to register with government in different ways. Businesses in New Zealand generally use one of these three structures:

  • Sole trader

A sole trader operates a business on their own. The trader controls, manages and owns the business and is entitled to all profits but is also personally liable for all business taxes and debts. Usually a sole trader can establish the business without following any formal or legal processes and can employ other people to help run the business.

Many New Zealand businesses start as sole traders and then progress to a company structure as the business grows. Others form companies right from the start to take advantage of the protection and other benefits offered by the company structure.

  • Partnership

Partnerships are most common among professional people and in the farming industry. This type of structure can be an effective way to share business operation costs where, for example, several professional people operate out of a joint office.

Many partnerships are established with a formal partnership agreement. The partnership itself does not pay income tax. Instead it distributes the partnership income to the partners. The partners then pay tax on their own share. Once the automatic option for professional people such as lawyers, doctors and accountants, partnerships are no longer as popular.

This is because professionals can now adopt a company structure and may offer better protection. A well thought-out partnership agreement is essential to cover contingencies and possible conflicts. No registration is required to start a partnership.

  • Limited Liability Company

A company is a formal and legal entity in its own right and separate from its shareholders or owners. Shareholders’ liability for losses is limited to their share of ownership of the company. This does not apply when company directors have given personal guarantees for company debts, where a company has been trading while insolvent or is considered to be ‘trading recklessly’.

In New Zealand, you can register (incorporate) a company online through the Companies Office. There is a small fee, currently NZ$150.The limited liability company has proven to be the most popular and successful form of business structure in New Zealand.

It has the advantage of helping foster confidence in the businesses by governing the relationships between investors (shareholders), directors and creditors and by giving customers, investors and other stakeholders a clearer picture of who and what they are dealing with.

Other Possible Business Structures

  • Look-Through Company (LTC)

This is a variation of a company structure that lets you offset any losses incurred in running your business against personal income from other sources (such as investments). It requires applying to Inland Revenue for special tax status.

An LTC must be a New Zealand tax resident company, it must not have more than five owners and it must not be a flat (i.e. apartment) owning company. You should discuss this option with your accountant or solicitor before making any decisions.

  • Trading Trust

A trading trust is a trust that carries on a business. This structure can offer benefits, but it is complicated and requires expert advice. Discuss the option with your accountant and your lawyer to see if it is more appropriate for your needs than the business structures outlined above

  • Co-operative

A co-operative business is owned and democratically controlled by its shareholder/members. The shareholders/members contribute the prime capital for the business and share in the profits of the business in proportion to their participation: the greater the participation, the larger the proportion of profits.

An example of this type of enterprise is a group of craftspeople banding together to jointly market their various craft products through a co-operatively owned and staffed studio or retail shop.

4. Get a RealMe® login

You may need to get a few registrations from government agencies. Several agencies use a RealMe® login. If you get a login early in the process, you can get on with your to-do list easily.

5. Get a New Zealand Business Number

The New Zealand Business Number (NZBN) serves as a unique identifier for your business. Your NZBN links to the information others need in order to work with you, like a trading name, phone number or email.

Having an NZBN will make it easier to do business because you won’t have to keep repeating the same information over and over when dealing with someone new or when something changes. If you’re a company, you’ll automatically get an NZBN. Sole traders, self-employed people or partnerships can register for an NZBN online and it’s free.

6. Secure your business name

Whether you’re new to being self-employed or in business, a small investment now will mean you won’t lose your ability to market and protect your name while getting other things in order.

7. Research regulations

There are certain regulations that may apply for some business, industries or regions. For instance, fair trading, consumer guarantees, privacy, health and safety, food licensing. Look into which central and local government regulations apply to your business.

  • License and Permits Needed to Do Business in New Zealand

It’s not just Inland Revenue or the Companies Office you might have to work with. Regional councils and other bodies may also play a part in the setting up of your business.

If you plan to work from home, for example, or you want to open a café or bakery, you have to apply for a licence first with your regional council. Your local council also regulates health and safety standards for all businesses and building permits, so it’s worth making contact before you start your business.

Here are some types of permit that will be needed;

  • Health and safety permit
  • Regional council permits
  • Business license
  • Insurance policies
  • ACC levies
  • Filling returns

8. Register your company

If you’ve decided to structure your business as a company then register online with the Companies Office — it’s low cost, quick and easy. You’ll need a RealMe login.

9. Register for GST

Register online with Inland Revenue. You’ll need to register for GST if you’re earning more than NZ$60,000 each year. You can register for GST at the same time you register your company.

10. Register your trade mark

A registered trade mark is the best way to protect your brands in the marketplace. You can use your SPA check to begin your application online with IPONZ. It’s quite quick and easy, low cost for a high level of protection.

Agencies in Charge of Registration and Issuing License to Businesses in New Zealand

  • Inland Revenue

All businesses must register with Inland Revenue for tax purposes, but companies also have to be incorporated with the Companies Office. The first step is to get an IRD number from Inland Revenue.

  • The Companies office

The Companies Office is the New Zealand government agency responsible for the administration of corporate body registers, including the Companies Register, occupational registers and the register of personal property securities (PPSR). It is an operating business unit within the Ministry of Business, Innovation, and Employment. The Companies Office has two main objectives:

  • To facilitate ease of doing business in New Zealand by providing easy to use and highly available corporate registers and easily accessible information.
  • To maintain confidence in the corporate registers it administers through a focus on integrity and taking enforcement action where this is necessary.

Regional council

Every region in New Zealand has licenses and permits required for every prospective business to have before opening. It is strongly recommended that you research about the permits required for your business even before investing.

  • To facilitate ease of doing business in New Zealand by providing easy to use and highly available corporate registers and easily accessible information.
  • To maintain confidence in the corporate registers it administers through a focus on integrity and taking enforcement action where this is necessary.

5 Best Cities to Do Business 

New Zealand has an open economy that works on free market principles. Over the last 30 years the New Zealand economy has gone from being one of the most regulated in the OECD to one of the least regulated, most free-market based economies.

Fertile soil and excellent growing conditions coupled with sophisticated farming methods and advanced agricultural technology provide the ideal environment for pastoral, forestry and horticulture activities. Various primary commodities account for around half of all goods exports and New Zealand is one of the top five dairy exporters in the world.

Best cities to start in Business in New Zealand are;

  • Auckland
  • Wellington
  • Christchurch
  • Dunedin
  • Palmerston North

Possible Challenges and Threats You Will Face

New Zealand ranks among the top five countries in the world for ease of doing business, but having insight to the investment environment and local knowledge of the legal, accounting and taxation framework is essential to succeed. New Zealand has laid out a welcome mat for foreign direct investment, offering incentives, rewards and a stable business environment.

But having local knowledge of the legal, accounting and taxation framework is essential to any overseas venture, and there are still several challenges to overcome when setting up in the Pacific island.

  • Dealing with Construction Permits
  • Registering property
  • Getting electricity
  • Getting Credit and Protecting Investors
  • Paying taxes
  • Trading across borders
  • Enforcing Contracts
  • Resolving Insolvency
  • Cultural
  • TMF groups

Economic Analysis

Noting that New Zealand’s economic growth has been faster than most other developed countries in recent years, the OECD commented in 2015 that: “inflation and inflation expectations are well anchored. Strong fiscal monetary policy frameworks and a healthy financial sector have yielded macroeconomic stability, underpinning growth. Employment is high, in large part thanks to flexible labour markets and ample immigration, business investment is robust and households and firms are optimistic.”

Between 2000 and 2007, the New Zealand economy expanded by an average of 3.5% each year as private consumption and residential investment grew strongly. Annual inflation averaged 2.6%, inside the Reserve Bank of New Zealand’s 1% to 3% target range, while the current account deficit averaged 5.5% of GDP.

Like most OECD countries, New Zealand’s economy experienced an economic slow-down following the global financial crisis in September 2008. As in other advanced economies, business and consumer confidence declined. Unlike most OECD countries however, after a 2% decline in 2009, the economy pulled out of recession.

It achieved 1.7% growth in 2010, 2% in 2011 and 3% in 2012. That compared with 0.3% growth in the uk and negative 0.9% in the euro area; 0.4% in Japan; 1.1% in Canada; and 1.6% in the USA.

By December 2015, annual growth had risen to 3.3%, the fastest rate of expansion in six years and, according the New Zealand Treasury, one of the strongest performances in the OECD. Growth for 2016 is expected to be around 3%, supported by net migration flows, labour income growth, and construction activity.

It is expected to fall back for 2017 and 2018, largely due to deteriorating terms of trade, particularly for our dairy exports. This factor has been somewhat offset however by falling oil prices and a lower exchange rate which is helping exporters. From 2019, growth is forecast to pick up again.

The New Zealand stock market has recovered strongly from the global financial crisis, up 121% from 1 April 2009 to 30 June 2015. Despite key economic drivers coming off their highs, steady economic growth and a weaker currency is expected to underpin corporate earnings and securities valuations in the medium term.

Facts and Figures in New Zealand That Will Interest You as an Investor/Entrepreneur

  • Rule of Law

New Zealand ranked second out of 175 countries surveyed in Transparency International’s 2014 Corruption Perceptions Index. The country is renowned for its efforts to penalize bribery and ensure a transparent, competitive, and corruption-free government procurement system. The judicial system is independent and functions well. Private property rights are strongly protected, and contracts are notably secure.

  • Limited Government

The top income tax rate is 33 percent, and the top corporate tax rate is 28 percent. Other taxes include a goods and services tax and environmental taxes. The overall tax burden equals 32.1 percent of total domestic income. Government spending amounts to 42.4 percent of GDP. The deficit has been reduced to below 2 percent of total domestic output, and public debt equals 34 percent of GDP.

  • Regulatory Efficiency

Start-up companies enjoy great flexibility under licensing and other regulatory frameworks. With no minimum capital required, it takes only one day to start a business. Flexible labour regulations facilitate a dynamic labour market, increasing overall productivity. New Zealand has the lowest subsidies among OECD countries. It removed all farm subsidies more than three decades ago, spurring development of a vibrant and diversified agriculture sector.

  • Open Markets

New Zealand’s average tariff rate is 1.4 percent, and non-tariff barriers are low. The government owns shares of companies operating in sectors that include rail transportation, energy, air transportation, and postal services. The financial system has remained stable, and prudent regulations allowed banks to withstand the global financial turmoil with little disruption.

Starting a Business in New Zealand – Market Feasibility Research

The economy of New Zealand is a mixed economy that depends greatly on international trade, mainly with Australia, the European Union, the United States, China, South Korea and Japan. The Closer Economic Relations agreement with Australia means that New Zealand’s economy is closely aligned with the Australian economy.

New Zealand’s economy has a sizable service sector, accounting for 63% of all GDP activity in 2015. Large scale manufacturing industries include aluminium production, food processing, metal fabrication, wood and paper products. Mining, manufacturing, electricity, gas, water, and waste services accounted for 16.5% of GDP in 2015. The primary sector continues to dominate New Zealand’s exports, despite accounting for 6.5% of GDP in 2015.

The major capital market is the New Zealand Exchange, known as the NZX. As of November 2014, NZX had a total of 258 listed securities with a combined market capitalisation of $94.1 billion. The currency is known as the New Zealand dollar, which is also the currency of five Pacific Island territories. The New Zealand dollar is the 10th most traded currency in the world.

List of Well Known Foreign Brands Doing Business 

Many people travel overseas in order to partake in a process of self-reflection and immerse themselves in foreign cultures that will somehow alter their character when they return home.

Others love to travel overseas to undergo extensive retail therapy and eat food in humorously large quantities and levels of deliciousness never experienced in little old New Zealand. Some also travel to find greener pastures or expand their businesses. Well known foreign brands in New Zealand include:

  • Gucci
  • Prada
  • Zara
  • Apple
  • Tiffany
  • ASOS
  • Legoland
  • Louis Vuitton
  • Swarovski
  • Christian Dior
  • Topshop
  • Google

List of Well known Indigenous Entrepreneurs

The following is a list of notable business people from New Zealand. This is a dynamic list and may never be able to satisfy particular standards for completeness.

  • Gregory Fortuin
  • Sir Jack Harris
  • Graeme Hart
  • Murray Haszard
  • Michael Hill
  • Dick Hubbard
  • Christopher Peter Huljich
  • Sir Robert Jones
  • Robert Laidlaw
  • Sam Morgan

List of Well known Indigenous Businesses

  • I love Ugly
  • Moreporks
  • Shark Week
  • Whittaker’s chocolate
  • Tip Top
  • All Blacks
  • Cadbury
  • Trade Me
  • Air New Zealand
  • Pineapple Lumps
  • Heinz Wattie’s