Foreign businessmen who want to set up a company in New Zealand in 2023 have several choices with respect to the structure of the business. One of the most employed types of companies is the limited liability company (LLC) which resembles the same business form in other Western countries. This is a suitable business form for those starting up a small business in NZ.
There are two types of limited liability companies in New Zealand: private or closed limited companies and public or open limited liability companies.
The requirements related to opening a limited liability company in this country are explained below by our company formation agents in New Zealand.
Local and foreign investors who are ready to register this type of legal entity in New Zealand in 2023 can rely on our complete assistance. The general company formation stages, as well as the main taxes for companies remain unchanged from previous years. read below to find out more.
| Quick Facts | |
|---|---|
| Minimum share capital in New Zealand |
No prescribed minimum |
|
Minimum number of shareholders |
1 |
|
Number of directors |
1 |
| Mandatory residency requirements for setting up a small business in NZ | No |
| Local director required (Yes/No) |
Yes |
| Time frame for setting up a small business in NZ (approx.) |
3 – 5 business days The process must be finalized within 20 days from reserving the company name |
| Corporate tax rate in New Zealand | 28% |
| Dividend tax rate |
– 0% – 33% in case of residents – 0%; 15%; 30% in case of non-residents |
| VAT rate in New Zealand |
15% standard rate and 0% in certain cases |
| Number of double taxation treaties (approx. ) | 40 |
| Annual meeting required |
Yes, although exceptions can apply |
| Accounting and filing requirements |
Preparing and filing annual returns is mandatory. |
| Foreign-ownership allowed | Yes |
| Tax exemptions or incentives for setting up a small business in NZ |
Various R&D incentives are available as well as industry-specific concessions (for farming, film production, environmental protection, etc.) |
| Additional licenses |
Yes, industry-specific licenses (for food businesses, supplying alcohol, markets on public land and more) |
Table of Contents
Requirements for setting up a New Zealand limited liability company
Foreign investors interested in creating a limited liability company in New Zealand must consider the following:
- Capital: there is no need for a minimum share capital when registering this type of company;
- Founders: the company needs to have at least one shareholder (no nationality conditions are imposed);
- Directors: the company must have at least one director who must be a New Zealand or Australian resident;
- Address: the company must have a registered address in a New Zealand city – virtual office services are available;
- Name: the company’s name must be unique and must be reserved with the Companies Office.
Investors who are interested in setting up a small business in NZ need to comply with the name requirements just as well as all the other ones listed above. Making the necessary name check is an important step as the name of the company will then be used for intellectual property purposes as well as building the brand image. Investors should remember that registering the company name is not the same as gaining trademark rights. Some names are protected or restricted and cannot be used. The list includes words like “bank”,” Her Majesty” “insurance” “Minister” and many others. Checking the name restrictions is advisable.
The details on the company directors are reported to the Companies Office and the initial director is registered upon incorporation. Following this, any new director needs to be registered within 20 days following their appointment. The data that is provided to the Companies Office regarding company directors include the full name of the individual, the date and place of birth (one should keep in mind that this information becomes public), the residential address (it cannot be a PO box) and the date of appointment. Additional contact details such as telephone and email address can be provided.
When starting up a small business in NZ investors need to provide an address, as mentioned above. The company is required to have a registered office, where the books and records are kept according to law, an address for services, where legal documents will be delivered and an address for communication. Investors should note that they are allowed to use different addresses (the company can have a different address for service from the one provided for the registered office), however, clear instructions on the company address are to be provided, such as the full details of the location, especially when using virtual office services and the address is located in an office building with multiple other companies.
Our New Zealand company formation consultants can help foreign investors who want to open limited liability companies in this country which was voted one of the easiest countries to do business in.
Limited liability company registration steps in New Zealand in 2023
Once the above-mentioned requirements are met, the future business owner can start the incorporation procedure for setting up a small business in NZ in the form of a limited liability company:
- the company name must be reserved – the procedure can be completed online;
- the company’s incorporation documents must be drafted and notarized;
- the shareholders must also prepare their passports if they are foreign citizens;
- an application form together with the resolution for registering the company must be filed with the Trade Register;
- once registered with the Trade Register, the company must also register with the tax authorities.
The company registration procedure of a limited liability company in New Zealand takes approximately one week. Investors who wish to open a LLC in 2023 and need assistance during this time can reach out to our company formation agents. Traveling to NZ may be subject to certain health and safety restrictions, depending on the foreign investor’s country of origin. Our team can help those interested start the incorporation process by preparing the documents (once you have provided us with a minimum number of required documents) and handle part of the steps in your name, through a power of attorney, as needed.
Tax registration for companies in New Zealand
An important part of the process of starting up a small business in NZ is the registration for the relevant tax purposes, including for the goods and services tax (GST). When the tax registration is complete, the new legal entity receives a company certificate of incorporation along with the Inland Revenue number and the GST number.
Companies that register for GST purposes also need to have obtained the relevant business industry code (BIC) that applies in their case, this is a code comprised of seven characters that indicates the services provided by the business, thus classifying it accordingly. This is sent by the authorities as part of the tax registration process. It is also a number that will be displayed in the company search field whenever such a public search is performed with the Companies Register.
When setting up a small business NZ, entrepreneurs will need to provide the following information for the purpose of applying for the Inland Revenue number:
- the company’s trade name; it is important to note that this is different from the chosen company name; our team of company formation agents can provide more details;
- the company address and the postal address; the default address is that of the registered address, however, the founders may choose to provide another one as needed;
- a contact telephone number and the name of a contact person;
- additional information on whether or not the company will be providing fringe benefits to ordinary or shareholder employees; our team can give you more details.
Another requirement for tax registration purposes is to inform the authorities of the individual who will act as a tax agent or tax representative. The company founder can choose to act as the registered tax agent himself or nominate another person.
Registration for the goods and services tax takes place if the company estimates that it will have an annual turnover of more than 60,000 $. This registration is optional for those interested in starting up a small business in NZ that will have a projected annual turnover of less than this amount.
Entrepreneurs are also reminded than once the business is set up they will need to comply with the requirements for registering as an employer and observing the rules set forth by the Ministry of Business, Innovation and Employment in regards to hours and wages, workplace policies, leave and holidays and other issues.
Below, we remind investors who are setting up a small business in NZ in 2023 of the main taxes applicable to companies:
- Corporate income tax rate: 28%;
- Dividend withholding tax rate: between 0% and 33% for resident companies and minimum 0% and maximum 33% for nonresident companies;
- Goods and services tax: 15% standard rate and 0% reduced rate.
Our team can help you open a business in New Zealand, whether it is an LLC or another business form. Our company formation packages are tailored to meet the needs of investors, according to the chosen business form and the industry in which the company will activate. You can reach out to us at any time, during the pre-incorporation phase, for more information about the NZ business climate and the regulations for companies.
The number of companies in New Zealand has been increasing, as data from the national statistical office show:
- in 2022 there were 592,700 registered enterprises, leading to a 5.0% increase compared to 2021 (from February 2021 to February 2022, more specifically);
- the number of paid employees working in NZ also increased by 3.4 percent on a year-on-year basis, from February 2021;
- between them, in February 2022, the total number of companies had 628,499 business locations in the country, also an increase (of 4.8) from February 2021.
If you would like to know more about the steps to set up a company in New Zealand that is not an LLC, our team can answer your questions. Choosing the suitable business form is a key step in the creation of a new business and our agents are able to provide investors with a detailed comparison, as well as information on the advantages and issues one is advised to take into account. You can reach out to us for more information about other business forms.
Please contact us if you need assistance in opening a limited liability company in New Zealand.