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 European Western countries. This is a suitable business form for those starting up a small business in NZ.
| 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) |
| Company name rules | The Companies Office sets forth several criteria for company name suitability (such as restricted or limited words). |
|
Company name reservation |
Possible via a service offered by the Companies Register. |
|
Company name change after incorporation |
Following the reservation of a new, available name, through a submission to the Companies Register. |
| Limited liability company name reservation | Once the name is reserved, the founders have 20 days to complete the incorporation of the NZ LLC. |
| LLC name reservation fee |
Name reservation fee – $10 plus GST. Please note that this fee can be subject to change. |
| Changes to the LLC |
Name changes (as seen above), shareholder and director changes, as well as company address changes post-incorporation are possible. |
| LLC removal from the Trade Register |
If the company does not comply with the requirements for information and the rules for directors, when it is in liquidation, or when it merges with another company. |
| Company address requirements |
The company has a registered office and an address for service (which must be physical locations in NZ). |
| LLC records address |
The registered office or another location communicated to the Register (It cannot be a PO box). |
| Share register requirements for the LLC | Must be kept in New Zealand, unless provided for otherwise in the company’s constitution. |
| LLC incorporation through a local representative |
One of our agents can act on your behalf through a power of attorney if you are unable to be present in New Zealand for the entire duration of the company formation. |
| Pre-incorporation assistance |
Advice on choosing the most suitable business form, shareholding issues, drafting and preparing the company’s constitutive documents, etc. |
| Post-incorporation assistance |
Includes advice on making the needed company changes, meeting the tax and filing requirements, obtaining licenses, and more. |
| NZ company closure |
Upon request, if the company fails. The legal entity is removed from the Register. |
| When to contact us | As soon as you decide to open a company in New Zealand or if you have questions about foreign investments in the country. |
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.
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 company’s name will then be used for intellectual property purposes and 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.
Concerning the company’s name, entrepreneurs who want to start a business in New Zealand should know that this depends on the availability of the chosen name. Once the founders of the LLC choose a suitable name for their new company (based on business activities, or other names they like), they will need to check its availability.
An online platform is available for this verification, and it allows the user to check not only if the chosen company name is valid for use, but also if they can use the same name for trademarks or web domains. Our team will help you reserve the company name, as well as start the process for trademark protection, as needed.
It is useful to keep in mind that the registered company name can be different from the trading company name. What this means is that, if the registered name is already in use, the founders of the new LLC can select a different, available registered name and reserve it with the authorities, and the company will be able to trade under a different name, as per their initial wishes.
It is advisable to use a different registered name whenever another company has registered the same name before (especially if it operates in the same business field), in order to avoid infringement claims (i.e., prevent the other business from claiming that you would pass off your business as theirs).
If you would like to know more about company name verifications, as well as IP registration, our team can assist you. The latter is useful for many businesses, however, you will need to factor this application into the overall time needed to open the business.
We invite you to watch a video about the NZ LLC:
The company registration procedure for a limited liability company in New Zealand takes approximately one week. Investors who wish to open an 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 handling 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 serve 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 that 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.
An LLC that will hire employees will need to comply with the needed registrations for becoming an employer before it starts employing staff. This registration is made with the Inland Revenue and it is followed by a registration for the fringe benefit tax (FTB), as well as a registration for the payment of the employer superannuation contribution tax (ESCT).
Some of the requirements applicable to employers include the following:
- the company will need to keep wage records;
- the employer is the one to make deductions from PAYE income paid;
- the company is the one that will fill in and file employer returns and also the one that will pay the deductions to the IRD.
The New Zealand LLC also has the obligation to announce the IRD when one or more employees stop working for the company.
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.
Do you need more information about corporate taxation and compliance? Our team will answer your questions.
Running a business in New Zealand is subject to a number of requirements and keeping records is mandatory (with some of these needing to be kept for several years). Understanding the requirements that apply to the LLC in New Zealand is an essential step and one that allows investors to rest assured that they remain compliant with the ongoing accounting and reporting requirements. You can ask us more about these, as well as request personalized information from our team.
Additional information for company creation in New Zealand
New companies will need to obtain special permits and licenses, depending on the business field in which they activate.
Companies that offer certain services need to obtain proper licenses, as well as comply with the rules for preventing money laundering and terrorism financing. This means that they will need to meet the current requirements for presenting ID and record-keeping. Examples of service providers that need to observe these rules include accountants, lawyers, real estate agents, or conveyancers. Our team can give you complete information about regulated activities.
Certain companies can qualify to become a “look-through company” when the owners only have look-through interest and the company has 5 or fewer owners (either natural persons or trustees). Entities treated as a look-through company will be treated as a partnership for income tax purposes (whilst retaining the requirements to file tax returns and reports just like any other company).
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 shown by data for the year 2022 from the national statistical office:
- 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;
- 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 opening a limited liability company in New Zealand.