New Zealand startups are easy to incorporate, and many foreign investors are attracted by the straightforward set up process.
Although it is true that the process of setting up a business in New Zealand can be initiated through the Internet, that does not mean that it is simple. It is a very important matter, so it is advisable to have the help of our experienced lawyers.
The decision to open a business in New Zealand is an important one. Luckily, the overall company incorporation process is the same for both local and foreign investors. Our team will assist you throughout the creation of a new company and will provide you with guidance and counseling on the particularities of the business environment and how it can impact the early life of a NZ startup.
This country offers several corporate structures for incorporating an Auckland startup:
- You can register as a Sole Trader, a perfectly legal entity for freelancers or digital nomads who want to work on their own or as freelancers with a small New Zealand startup,
- You can establish a Partnership in case it is more convenient for you to share the costs of operating your business with other partners, eventually,
- You have the possibility to incorporate a Limited Liability Company, a suitable legal structure to protect your assets by separating them from your business.
The Limited Liability Company (LLC)is the legal structure most chosen by entrepreneurs and investors who hire us to help them when it comes to company formation in New Zealand.
Investors who are interested in forming Auckland startups can find out more about the available types of businesses from our team.
You can easily set up a company in New Zealand as a startup with our help. Receiving personalized assistance during the earliest stages of company creation is valuable for many investors, especially those forming a startup and who will be in need of counsel and assistance along the way, as they are opening and running their first business in New Zealand. You can reach out to us for details.
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The three challenges of setting up a startup in Auckland
If you are a foreign entrepreneur looking to enter the Auckland startup community, there are a couple of things to keep in mind about New Zealand startups. There are three main challenges when it comes to incorporating a company in New Zealand. Investors and entrepreneurs who manage to get ahead of these challenges tend to start their businesses smoothly.
The first thing you need to be clear about is that in order to start a business in New Zealand, the company must have at least one director who is a New Zealand (or Australian) resident. If you do not have a local director for Auckland startups, our team can help you appoint nominee directors, one of the most common ways to get this hurdle out of the way when incorporating an Auckland startup.
The second challenge is that you will need a valid address to link to the business you are starting in New Zealand. This is where virtual offices come in.
Virtual offices allow you to have a valid address to move forward in the company formation process in New Zealand. With this, you will have almost everything you need to complete the process, but there is still one last challenge to overcome.
After resolving the director and local address issue, the only thing left is to get a tax identification number. This is one of the last steps in the process of setting up a company. Depending on the type of business you have decided to incorporate, you will need an individual tax number or a corporate tax number.
As you can see, the process to incorporate a start up business in NZ is pretty straightforward in terms of requirements. Even these three “challenges” are easily overcome with our support. Contact our team now if you need more information about company formation in New Zealand.
Essential steps when incorporating New Zealand startups
Apart from determining the resident company directors, as well as the registered office which can be a virtual one, investors who start a new business in NZ will also need to concern themselves with the company name as well as the formal registration of their business with the Companies Office.
Reserving the company name is the first step after deciding the business form and it starts with checking that a company name is available for use. Our team can help you during this stage and we recommend preparing more than one option for the business name, in case an identical or almost identical name is already in use. One should also keep in mind that certain names are restricted or protected by law. The words included in this category are “bank”, “Government”, “Her Majesty”, “Insurance”, “Queen”, “Royal”, and others.
NZ startups are registered with the Companies Office by filing a number of documents. Upon registration, the founders will provide the address of the registered office, used for correspondence with the NZ authorities, as well as the email address. This will later be used by the authorities for part of the notifications (such as annual return reminders) and for sending the certificate of incorporation. All the company directors, and each shareholder will be registered and these individuals are asked to sign a consent form. The shareholders will also provide information about the number of shares they own in the company. Once all the documents are submitted and the company is formally registered with the Companies Office, the Certificate of Incorporation is issued to the company founders and the company details become publicly available.
Incorporating New Zealand startups is a fairly simple process and one that can be performed with the help of our company formation experts. You can reach out to us to find out more about incorporating a company with a company constitution (the document that outlines the rights, powers and duties of the legal entity, as well as the directors and shareholders – applicable to limited companies).
How much money do I need to set up a company in New Zealand?
One of the most curious elements of incorporating a New Zealand startup process is that there is no minimum capital required. You have to pay $90 for the company incorporation and $10 for the name reservation. The fees are payable with the Companies Office and do not include the goods and services tax (GST). Please keep in mind that these fees were valid as of 1 July 2021 and they can be subject to change. If you wish to know more about the Companies Office fees when you commence a start up business in NZ, you can reach out to our agents.
However, it is essential to remember that while it is possible to incorporate and establish a new startup in New Zealand for a relatively low initial capital when compared to other countries, you must have sufficient funds to hire staff and market your new venture from day one. Depending on the nature of your business, without the necessary funds, you would have to take on too many tasks and responsibilities as an entrepreneur, diluting your potential and stunting your growth.
How to open a bank account for my startup in New Zealand?
These are the most common documents you need to open a bank account after going through the company formation process in New Zealand:
- Company incorporation documents.
- Proof of domicile.
- Documents of the owners of the company.
- Account opening deposit.
New Zealand banks may ask for additional documents if required. In addition, the opening amounts for company accounts vary from bank to bank. Therefore, we recommend you speak to one of our experts to find out which bank is best for you based on your needs.
The whole process from the moment you start with choosing the type of company you need until you open your bank account and receive your tax information number can be quick and easy. But only if you know the details of every document you need to submit and the requirements you need to meet.
For investors or entrepreneurs who do not have time to waste on doing the paperwork by themselves or giving themselves the chance to make a mistake with any document, we always recommend hiring the services of our lawyers in New Zealand so you may incorporate an Auckland startup.
What are the company’s obligations?
As described herein, the NZ company formation process is a straightforward one that can be easily handled with the help of our team if startup investors cannot be present in the country during the entire procedure. However, certain obligations attributable to the new company owners will start once the company is registered.
The main issues investors who open New Zealand startups need to be concerned with include keeping the company records, observing the requirements for company meetings as well as following the tax rules.
Keeping the company’s details up to date is also essential. This means that once the company is registered, the founders may choose to change the business name or address, as well as reappoint the company director or change shareholders. However, all of these changes will be notified to the Companies Office.
The following company records are essential and investors need to observe the rules set forth by the Inland Revenue:
- the minutes of the board meetings;
- resolutions and certificates;
- financial statement copies, the assets and liabilities records.
The financial statements, the assets and liabilities record, and the accounting records (bank statements, invoices fir sold and purchased goods) are to be kept for 7 years. As far as the financial records are concerned, these are drawn up with the help of an accountant and will comply with the generally accepted accounting practice in NZ (GAAP).
New Zealand startups are considered residents for tax purposes. The following taxes are important:
- 28% corporate income tax rate;
- 30% nonresident withholding tax in case of dividends paid to a nonresident, if they are not fully imputed;
- 15% goods and services tax, with a 0% rate applicable in case of some types of goods and services.
GST registration is mandatory for those companies that record a value of annual supplies subject to GST that exceeds NZD 60,000. Voluntary registration is also possible. The goods and services tax returns are filed monthly, bimonthly or biannually.
Why incorporate a startup in New Zealand?
With the right help, starting a business in New Zealand can be accomplished in less than a week. In fact, New Zealand is the easiest country in the world to do business in, as:
- The Total business income increased by an average of 5% per year during the 2017-2019 period before the pandemic
- Total R&D expenditure increased by 18% in 2020 from the expenditure in 2019
- there are over 500 NZ startups despite only having 5 million inhabitants
- New Zealand has one of the best early-stage funding for startup scores, according to the Global Startup Ecosystem Report, with a 0.30 score, while Sydney, a well-known hub, has only 0.25.
- New Zealand is the second-freest economy in the world, according to the Index of Economic Freedom, with a score of 83.9.
Contact us now so we can help you get your new business up and running in no time. We assist investors who wish to know more about New Zealand startups.