SOLETRADER.CO.NZ

Being a sole trader in New Zealand

A practical, plain English guide for self-employed Kiwis. Understand what a sole trader is, how to set one up, your tax obligations, and what to think about as your business grows.

Easy to start Low cost Personal responsibility

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What is a sole trader?

A sole trader is the simplest way to operate a business in New Zealand. You trade in your own name, make your own decisions, keep all profits, and accept full personal responsibility for any debts or obligations.

There is no separate legal entity like a company. This structure suits freelancers, contractors, tradies, online sellers, and anyone wanting to test a business idea without complex paperwork.

The downside: you are personally liable if the business cannot pay what it owes. Your personal assets could be exposed.

Common examples

  • Designer, developer or consultant
  • Tradie, cleaner, handyman
  • Market stall or online shop
  • Side hustle / part-time income

If your business grows or risk increases, switching to a company structure may make sense.

How to set up as a sole trader

You do not fill out a single “sole trader form”. You simply begin trading and let Inland Revenue know you are self-employed.

  • Tell Inland Revenue: You will use your personal IRD number to file income tax.
  • Check GST requirements: If turnover exceeds $60,000 in any 12 months, you must register.
  • Get an NZBN: Free and helpful for government and supplier interactions.
  • Open a business bank account: Keeps personal and business finances separate.

Licences and obligations

  • Some industries require permits (food, trades, transport, childcare).
  • If you hire staff, you must meet PAYE, KiwiSaver and employer obligations.
  • ACC charges levies based on your work type and income.
  • If unsure, speak with an accountant before starting.

Tax and financial basics

Your business profit is treated as personal income. You file one individual tax return each year covering all earnings.

  • Income & expenses: Keep all receipts, invoices and records.
  • Deductions: Tools, software, home office costs and business expenses reduce tax.
  • Provisional tax: May apply as your income grows.
  • ACC levies: Required for all self-employed workers.

Smart money habits

  • Use one bank account for business only.
  • Put aside tax & GST as payments come in.
  • Use simple accounting tools or a spreadsheet.
  • Talk to an accountant early.

Benefits

  • Very low cost to start
  • Full control over decisions
  • Flexible — great for testing ideas
  • More privacy than companies
  • Easy to switch to a company later

Risks

  • Unlimited personal liability
  • Some clients prefer companies
  • Harder to raise investment
  • Business stops if you cannot work

Insurance, contracts and careful planning reduce risk.

Checklist before you start

  • Confirm the structure fits your risk level.
  • Tell IRD you are self-employed.
  • Check GST requirements.
  • Open a business bank account.
  • Check licence/permit requirements.
  • Review ACC cover or insurance.
  • Secure a domain name & email.

Secure your online name

Your domain name is your public identity. It is worth securing early.

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