A Foreigner’s Guide to Registering Your Company in New Zealand

Why Register a Company in New Zealand?

There are several compelling reasons to register your company in New Zealand. First, the country has a stable and transparent legal framework, which makes it an ideal destination for foreign entrepreneurs seeking a supportive environment for their businesses.

New Zealand boasts a sophisticated financial system with easy access to capital markets and a range of tax incentives that can help startups grow sustainably.

Perhaps company registration offers legal protection for business owners. By registering your company, you can shield personal assets from business liabilities, limiting your legal and financial exposure in the event of unforeseen circumstances.

This means you can focus on growing your business with peace of mind, knowing that you are operating within the boundaries of the law and are protected from legal risks.

Overall, incorporating your business in New Zealand is a smart move for any entrepreneur seeking to establish a successful business in a supportive and dynamic environment.

Choosing the right business structure

Choosing the right business structure is a crucial decision that can impact the success of your company. There are various business structures to choose from in New Zealand, such as a sole trader, partnership, company, and trust.

Each structure offers distinct advantages and disadvantages, such as legal liability, tax obligations, and management structures. Therefore, it is important to evaluate your business needs and priorities carefully before selecting the structure.

One of the key factors to consider when choosing a business structure is legal liability. Business owners must ensure they have enough personal coverage to protect their personal assets from litigation. Still, depending on the structure, this protection may vary. 

For example, a sole trader is only responsible for any business obligations, whereas a limited liability company provides the members with limited legal liability for the company’s debts. 

Consulting with a legal advisor or accountant may help you understand these benefits and constraints, allowing you to decide on the business structure that best suits your needs. 

In summary, choosing the right business structure is an essential part of starting and operating a successful business in New Zealand. Considering various factors, such as legal liability, tax obligations, and management structures, can help ensure you make an informed decision.

By dedicating time and putting a little thought into selecting the most appropriate business structure, you can streamline your company registration process and make your business adventure smooth and successful.

The Types of Companies Available in New Zealand

New Zealand offers a diverse range of company types to suit different business needs. The most common types include:

• Sole traders, 
• Partnerships, 
• Limited Liability companies (LLCs), and 
• Public companies. 

there are other, less common types, such as

• Joint venture
• Cooperative companies
• Unlimited companies
• Subsidiary companies or representative companies

A sole trader is the simplest option and involves one person running the business without the need to register a company. Partnerships involve two or more people sharing ownership of the business. 

The most popular option is an LLC because it provides owners with limited liability and flexibility in taxation and management. Public companies are larger entities that issue shares on the stock exchange, allowing people to invest and own a portion of the business.

We will elaborate more on the companies below. By understanding the companies and their advantages, you can make an informed decision and streamline the registration process in New Zealand. 

You should note that it is crucial to seek professional legal advice before registering your company.

Sole Trader/Proprietorship

In New Zealand, starting a business as a sole trader is one of the easiest and most common options. People who want to work for themselves on a small scale normally use the sole trader structure. While they can have employees, most choose not to, usually to save costs.

As a sole trader in NZ, you can:

• operate a business under your own name
• Pay your tax returns under your own name and using your personal tax rates. 
• Choose to be an employer 
• Choose to be GST (Goods and Services Tax) registered

Because a sole trader’s income is taxed at personal tax rates, operating under a sole trader structure can cost you more in tax payable on your income than other structures might. You cannot also separate your personal liabilities from your business liabilities.

With this in mind, it’s important to review your structure regularly to ensure it’s the best one for you. At some point, you may revise your decision and change your structure to a limited company.

Partnership

The Partnership Act governs this structure. A partnership comprises two or more individuals operating a small business and referred to as partners. 

Both personal and business liabilities are lumped together, and the partners bear these equally. The partners bear all profits, losses, and debts incurred equally or as provided for by the partnership agreement.

There is also a limited partnership structure governed by the Limited Partnerships Act 2008, which is new to NZ.

Limited Liability Company (LLC)

A limited company is a very popular business structure in NZ, but it is only an option for residents of the country. The Companies Act 1993 governs this business structure.

You can set up a limited company with one or more shareholders. A shareholder can either be an individual, a trust, or another company.

Shareholders of the company jointly own the company to the limit of the shares held by each of them. The LLC is treated as a natural person and has full responsibility for all its legal and financial obligations.

Unlike a sole trader/proprietorship, the liability of the company does not extend to the shareholders. The shareholders are liable for any money owed on their shares. They are also liable for personal guarantees given to lenders or creditors.

It is typical for a limited company to have a valid shareholder agreement, which will guide the activities of the shareholders in relation to the company.

An LLC is liable to pay all company taxes that are due to the government.

A LLC can also have the status of a Look Through Company (LTC), which will change its tax implications. A LTC is treated as a partnership as its liabilities are transferred to its shareholders. This simply means, all debts, liabilities, or losses incurred by the company can be offset against the shareholders’ private income. The shareholders will also be responsible for all tax obligations for the company.

Unlimited companies

An unlimited company’s shareholders, as opposed to its limited liability counterpart, are ultimately liable for any debts that the business cannot pay. The company’s constitution makes provision for this clause.

Most often, unlimited corporations are used to satisfy very specific, frequently foreign, legal requirements.

It is important to seek legal advice if you’re thinking of setting up this type of company.

Cooperative companies/Mutuals (Co-ops)

A co-operative company is a type of LLC and is incorporated in the same way. You can register simultaneously or afterwards under the Co-operative Companies Act 1996. A distinct feature is the word “co-operative” that is always present in their name. 

You can choose to register under other laws  such as the Friendly Societies and Credit Unions Act, the Building Societies and Credit Unions Act, the Industrial and Provident Societies Act, and the Farmers Mutual Act.

Its goal is to meet the needs of all of its shareholders by offering them commercial services. Co-ops must be governed by a majority of their members, who must hold at least 60% of the voting rights and engage in regular trading with them. 

A portion of the profits made by co-ops are returned to their shareholders as shares or rebates.

The structure of co-ops is not restricted; their members can be anybody, including their suppliers, customers, or staff members. They are referred to as transacting shareholders, shareholders who:

• Provide the company with goods and services
• Purchase the goods or services of the company, 
• Engage in business dealings with the company
• Have member representation on the board of directors

Co-operative businesses operate in various industries, including community services, financial services, education, agriculture, horticulture, manufacturing,  utilities,  health, wholesale, and retail.  

It is required that a co-op have a constitution that describes its activities, which must be filed with the Companies Office. 

Joint Venture (JV)

A joint venture can comprise two or more parties and is very similar to a partnership. The Joint Venture agreement governs it.

This type of business structure usually involves businesses merging resources to carry out a specific goal or business venture.

Typically, all the JV parties own the assets and liabilities separately and use them for the business venture. Neither of the parties can be liable for the other party’s debt.

Unless the JV is incorporated, in which case a separate tax filing is necessary, each party discloses its share of profit or loss on its own tax return.

Subsidiary companies/representative offices/branches for foreign companies

As a foreign company, there are businesses you can conduct without registration. You can check here to know if your company requires registration to carry on business in New Zealand. 

There are three choices for a foreign company/overseas company seeking to operate in New Zealand. You can choose to:

• Set up a subsidiary in New Zealand. As a subsidiary, you can wholly own the company and control its affairs from a holding company. Register the company in the Companies Register. A company is regarded as a subsidiary of another where:
  • The composition of its board is determined by another company
  • Another company controls more than half of the maximum number of votes at company meetings
  • Over 50% of the shares are held by another company.
  • More than half of each share dividend  is due to another company. 
• Set up a branch in New Zealand. This branch will be solely handling all your NZ operations. The branch won’t be a separate legal entity from your head office in your home country, but NZ laws will govern it. Register the branch on the NZ Overseas Register.
• Become a New Zealand company. This approach simply means you will give up your company incorporation in your home country and transfer your incorporation to New Zealand. 

To do this, you will apply to incorporate your company in the NZ Companies Register. To qualify, you need to have at least one director who lives in:

• New Zealand. To satisfy this requirement, you must have lived in New Zealand for over 183 days in a 12-month period. If you don’t meet these criteria, you can provide the Registrar of Companies with further information, such as
  • The time you spend in NZ
  • Your affiliations in NZ
  • How you live when you are in NZ
  • Whether the combination of the above information will help determine if you have fulfilled the required obligation.  

For more information on who can be a director, check the companies office website. 

• Australia and is a director of a company incorporated in Australia

How to Register with the Companies Office as a Foreign Company

1. Reserve your company’s name: reserve a name that is the same as the one your company is registered under in your home country, where it was incorporated. The name reservation costs $10 (plus tax) online. You will need to have a Realme Online Services account to do this.

If your company was incorporated in Australia, you can use your Australian Company Number (ACN) to retrieve your company name from the Australian Securities and Investments Commission (ASIC) register.

2. Gather all the required  information for your application: When you apply, you’ll be asked to provide the following information about your company’s incorporation and its New Zealand operations.
   1. Contact details: Provide addresses in New Zealand for:
      1. your principal place of business
      2. the person allowed to accept service — that is, accept legal documents, and communications

Both addresses must be physical — not a post office box, private bag, or DX service.

3. A company email address

2. Company addresses 
3. Date of commencement of business. This is the date you started a business in New Zealand. Remember, register within 10 working days of commencing your business activities in NZ.
4. Annual return filing month: Filing an annual return for your foreign company in New Zealand is compulsory. You have the liberty to choose the month you will file your annual returns. You can choose any month of the year apart from December and January.
5. Annual returns for overseas companies: Your up to date annual returns filed for your foreign company in your home country.
6. Balance date and financial statements: You need to choose a balance date for your New Zealand company that matches your other company. The balance date is usually the last day of the accounting year, which runs from April 1 to the next March 31.
7. Audited financial statements: This only applies to large foreign companies. It is required that the audited financial statements be submitted every year.
8. Financial reporting for overseas companies 
9. Certificate of Incorporation in home country. This does not apply to companies incorporated in Australia.
10. Your company’s current directors’ details. This includes:
    1. full legal name
    2. residential address
    3. email address
    4. phone numbers: landline, mobile and fax numbers.

This requirement does not apply to Australian companies.

11. Your company constitution: If your company’s constitution is not in English, you are required to provide a certified translation. This requirement does not apply to companies incorporated in Australia.

3. Apply for company registration: If the company name reservation is successful, you can register your company online. The registration costs $130 (plus tax).
4. Processing your application: Where your application is accepted, a certificate of registration is issued and the company will be automatically uploaded on the Overseas register.

If your application is to become a New Zealand company, besides the above, you will have to: 

• Download and complete Form 20. A director of your company must sign the form. Alongside the completed form, you will also provide:
  • Confirmation of name reservation
  • Certificate of incorporation from the country your company is currently incorporated
  • A certified copy of your company’s constitution
  • A statutory declaration form from a director or an allowed person confirming that you have no restrictions from registering your company in New Zealand.
  • A certified translation of the documents, if they are not in English

If your company is already operating as a subsidiary or branch in New Zealand. You do not need to provide your company’s constitution and incorporation certificate.

• Submit and send your application to the New Zealand Companies Office at National Processing Centre, Private Bag 92061, Victoria Street West, Auckland 1142, New Zealand. The company registration costs $118.74 (plus GST) to incorporate a company. 
• Remove your company from your home country’s company register

It is required that, as a foreign company, you register with the Companies Office within 10 working days of commencing business activities in New Zealand.

How to Register a Business in New Zealand

Registering a business in New Zealand requires careful planning, attention to detail, and compliance with legal and administrative requirements. To register your company, you’ll need to choose an appropriate legal structure, as enunciated above.

You’ll also need to apply for a business name, which must be unique and not too similar to existing names. 

Other important steps include getting a New Zealand Business Number (NZBN), registering for goods and services tax (GST) if applicable, and setting up a business bank account.

It’s important to note that some legal structures, such as a limited liability company, require more documentation and registration steps than others. 

To streamline the process and ensure compliance, consider seeking professional guidance or using online tools from the New Zealand government’s Companies Office, like Realme.

By adhering to the requirements and completing the steps in a timely manner, you can successfully register your business and focus on growing and operating your company in New Zealand.

Let’s dive a little into taxation and business accounting for your company.

Tax and accounting

Tax and accounting are crucial aspects of running a successful business in New Zealand. Proper tax compliance ensures that businesses contribute their fair share to the country’s economy. Accurate accounting practises improve decision-making and performance monitoring. 

This also goes hand in hand with opening a business bank account with a bank of your choice. It is important that you do due diligence on each bank’s policies before settling on one.

When registering a new company, it’s important to consider tax and accounting practises. New Zealand operates under a self-assessment tax system, where businesses are required to calculate their own income tax liability and pay it within a set timeframe. 

Accounting practises in New Zealand must comply with the Financial Reporting Act, which outlines standards for preparing financial statements, including balance sheets and profit-and-loss statements. 

It’s essential to maintain accurate financial records  for at least seven years. Businesses should utilise accounting software to streamline financial management processes and minimise errors. 

It’s essential to engage with a qualified accountant who is familiar with New Zealand’s tax laws and accounting standards, as non-compliance can cause costly fines and legal problems.

With tax and accounting processes streamlined, businesses can focus on growth and expansion, confident in their compliance with New Zealand’s legal and administrative requirements. There are some tax that are basic for all businesses. We will discuss this next.

Basic tax types

The foundational requirement for businesses operating in New Zealand is to pay taxes. There are several tax types that a business must consider, including, among others: 

• Income tax: This is levied on the profits earned by a business. The rate varies depending on the amount of income earned. 
• Goods and services tax (GST): It is levied on most goods and services in New Zealand and the standard rate is 15%. 
• Fringe benefit tax (FBT). This tax is levied on benefits paid to employees, such as health insurance and company cars.

It is imperative that you understand the processes and comply with the regulatory bodies handling tax affairs. This ensures compliance with, and the avoidance of, any legal battles that may arise. 

Considering that tax regulations are subject to periodic changes, it’s essential to review any updates or developments regularly.

Misunderstanding or ignorance of the regulatory framework can have dire consequences, including substantial penalties and even the winding-up of your business. 

It is essential to seek professional advice to ensure that you stay updated on the tax implications affecting your business.

Advantages of Registering your company in New Zealand

Registering your company in New Zealand has many benefits that can give you an advantage over your competitors. Let’s discuss a few: 

• The country boasts a stable economy, which makes it an attractive destination for foreign investors and businesses. New Zealand’s business environment is known for being entrepreneur-friendly. You can start and run a business with relatively low costs.
• The country has powerful institutions that uphold the rule of law. This ensures a fair and just business environment that supports growth and innovation.
• Free trade agreements with major global markets, including Australia, China, and the United States. These agreements provide New Zealand businesses with preferential access to these markets, allowing them to compete on a level playing field with other companies in these countries. 
• New Zealand has a strong intellectual property protection regime. It safeguards the interests of businesses that invest in research and development. 

Overall, registering your company in New Zealand can provide you with a stable, supportive, and secure environment to grow your business and achieve success.

Disadvantages of Registering your company in New Zealand

Despite the benefits of registering a company in New Zealand, there are also some disadvantages to consider before embarking on the process. 

One of the primary drawbacks is the cost involved. The fees for registering a company can be higher than in other countries, and there may also be ongoing fees to maintain the registration. This can be a significant burden for small businesses or start-ups on a tight budget.

Another potential disadvantage is the level of bureaucracy, and paperwork required. Registering a company in New Zealand involves submitting detailed documentation, including business plans, financial statements, and shareholder information.

This can be time-consuming and complex, especially for those unfamiliar with New Zealand’s legal and regulatory frameworks. 

The process may also involve waiting periods for approval, which can delay the start of the business. 

Overall, while registering a company in New Zealand can offer many benefits, it is important to weigh these against the potential drawbacks before deciding.

Frequently Asked Questions

How much time do I need to register my company in NZ?

Once your reserved company name is approved, you have twenty (20) working days to complete the incorporation process.

Can foreigners register a company in NZ?

Yes. It is required that you get an entrepreneur visa if you are not a resident before you can run a business.

How do I check a company in NZ?

You can do this on the Companies Office website, which provides full details of all companies duly incorporated in New Zealand.

What is IRD in NZ?

This is the Inland Revenue Department (IRD). They are the tax regulatory authority in New Zealand.

How do I find an IRD number in NZ?

If you are a registered taxpayer, you can find your IRD number here on the IRD website

How do I open an IRD account in NZ?

There are three approaches to this:

• As a NZ citizen, you can apply online or complete a paper application.

• If you have a resident visa or a student or work visa or an Australian passport. You can apply online or complete a paper application if you meet the requirements. 
• If you live outside NZ, you will need a current New Zealand bank account before you apply for an IRD number. Check here for more details.

What is a New Zealand company’s registered number?

This is a thirteen digit number allocated to all registered businesses in New Zealand. It is a unique identifier that contains all their information on the companies office website.

What is the companies office in NZ?

This is the New Zealand’s government agency responsible for company registration and all related matters. It is simply called the Companies Office.

Can you get a list of all the shareholders in a company?

You can request a list of the shareholders from the company or check the company register at the Companies Office. You will only get a comprehensive list if the company in question files its annual returns promptly.

How do I find shareholding details for a private company?

You can request a list of the shareholders from the company or check the company register at the Companies Office. You will only get a comprehensive list if the company in question files its annual returns promptly.

How do I check my company status?

You can easily access this on the Companies Register.