There are many small businesses operating in New Zealand. As a result there are many opportunities to develop your own work through self-employment, franchises or building a business from scratch.
As you may know, any business comes with risks and you ask yourself if your idea will be viable or not. A large number of small businesses fail in their first year of operation. Fortunately, New Zealand does encourage entrepreneurs and there are a number of agencies that help you get on your feet and the Government offers small grants to those who apply to get you off the ground and running. There are also a number of free small business courses that allow you to develop your business skills.
There are many things that you need to do prior to starting your business:
You will need to:
- Set a direction for the business
- Asses viability, financial returns and what you expect from your business
- Research or test drive your proposed business venture before you invest fully
It is important to have a well planned business plan in order to be successful.
What tax requirements are there?
When you are setting up your business you may need to register for GST and an IRD number. You may also need to register as an employer, if you intend to have employees.
Good & Services Tax
As a business owner or service provider you can charge GST on your product or service. You only need to register for GST if your business acheives a ceertain level of sales. See link below for details.
You may choose to register for GST. This is completely voluntary outside of the above criteria, but even for a small business when billing other businesses many prefer that you are GST registered.
You will need to complete an income tax return each year that includes a summary of your income and expenses. There are different tax types for different business types so you need to learn what yours will be. You can either do this yourself or you can use a tax agent such as a Chartered Accountant.
The NZ Government requires you pay provisional taxation on earnings.
This is a tax that is paid in advanced based on your previous 12 months of trading. In your first year of business it is important to allow for this as it this policy results in two tax bills coming in at essentially the same time. After this however you will only have one tax bill per year. The Inland Revenue Department does allow for payment in instalments to those eligible.
The Inland Revenue Department has Business Tax information officers who specialise in helping you get your head around the tax system. This is a free service.
If you intend to employ someone you need to pay them a wage. This can either be an hourly rate or a yearly salary.
Other monetary factors to consider when employing people is allowing for holiday pay, sick pay, special leave, the extra cost of getting someone to cover your employees while they are on leave, the provision for paying superannuation.
Kiwisaver is a Superannuation Initiative in New Zealand. It is not compulsory for employees to have, but it is compulsory for employers to offer it to their staff.
You can find this information at www.ird.govt.nz
There are a number of organisations that provide free training for small business owners. Here are some useful websites
Buying and Selling
If you are interested in buying into a franchise or other business the above information is still applicable, however here are some resources where you can find businesses for sale