The wrong structure can put your personal assets at risk. If your business runs into trouble, your home and savings could be exposed. A company provides separation; a sole trader offers none.
28%
Tax Implications
Companies pay 28% on profits (as at April 2024). Sole traders pay their personal rate (up to 39%). Trusts have their own rules. The right choice depends on your income level and how you plan to use profits.
Retained earnings vs. drawings
ACC implications
Exit and sale scenarios
Growth & Exit
Want to bring in co-owners? Attract investors? Sell the business later? Some structures make this straightforward. Others require expensive restructuring. Plan ahead.
Your Options
Six paths. One right for you.
Each structure serves a purpose. The right choice depends on your situation, not a one-size-fits-all rule.
Sole Trader
You and the business are the same entity. Simplest to set up and run.
+ No setup costs
+ Simple tax returns
- Unlimited personal liability
Low-risk contractors
Partnership
Two or more people operating together, sharing profits and responsibilities.
+ Shared resources
+ Flexible profit sharing
- Liable for partnership debts
- Disputes can be costly
Professional practices
Limited Partnership
A general partner runs the business, with limited partners investing capital and limited liability.
+ Attracts passive investors
+ Limited liability for investors
- General partner carries risk
- More complex compliance
Capital-heavy ventures
Most common
Company
A separate legal entity from its owners. Most common for serious businesses.
+ Limited liability protection
+ Easier to sell or transfer
- Compliance obligations
- Director duties apply
Growing businesses
Trust
Trusts can own business assets or company shares. Useful for separation and succession.
+ Asset protection
+ Succession planning
- 39% tax rate if income is kept by trustees
- Disclosure obligations
Family enterprises
Joint Venture
Two or more parties collaborate on a defined project while keeping their own businesses separate.
+ Share resources and expertise
+ Clear project scope
- Needs careful risk allocation
- Exit terms must be clear
One-off projects
There's no universally "best" structure. What works for one business may not work for another. We help you understand what each option means for your specific situation.
How much personal liability are you comfortable with? Are you taking on work that could expose you to claims?
Ownership
Now and future
Are there multiple owners involved now? Do you expect to bring in partners or investors in the future? Or are you and others joining together for a single project?
Growth Plans
Five year view
What are your plans for the next five years? Staying small, hiring staff, selling, or passing to family?
Financial Planning
Bigger picture
How does your business structure fit with your overall financial planning? Your personal assets?
Industry Context
Sector norms
What's typical in your industry? Some sectors have professional requirements or customer expectations.
Tax Position
Coordinate with accountant
What's your accountant's view? The legal structure must align with your tax planning.
Existing Businesses
When to restructure.
Many Hawke's Bay business owners come to us at a decision point: Their accountant has mentioned incorporating a company; they want to bring in a partner, or they're taking on work that feels riskier than before.
01
Your revenue has grown significantly
Tax planning becomes more important at higher income levels.
02
You are taking on riskier work
Higher-value contracts mean higher exposure.
03
You want to bring in others
Partners, investors, or family members joining the business, or doing a project with you.
04
You are thinking about succession
How you'll exit affects what structure makes sense now.
Restructuring costs money.
Changing from sole trader to company, or restructuring ownership, isn't free. There are legal costs, accounting costs, and potentially tax consequences.
That's why getting it right the first time matters, and why, if you do need to restructure, doing it properly matters even more.
Any existing documents relevant to your situation: company records, contracts,
agreements you are considering, or details of issues you are facing. But if you
are just at the thinking stage, that is fine too.
Get your business structure right
Choosing between a company, trust, or partnership? We'll help you find the best fit for your goals.
