Choosing how to structure your business is one of the first big decisions you will make. It affects everything from how much tax you pay to whether your personal assets are at risk if things go wrong.
Sole trader
The simplest way to start a business. You and your business are legally the same entity - no separate registration required beyond an IRD number and any relevant licences.
Simple to set up, low compliance costs, you keep all profits, easy to wind up
Unlimited personal liability, profits taxed at your personal rate (up to 39%), harder to bring in investors or partners
Low-risk service businesses, contractors, freelancers starting out
Company (Limited Liability)
A company is a separate legal entity from its owners (shareholders). It can own property, enter contracts, and incur debts in its own name. Directors manage the company on behalf of shareholders.
Limited liability (personal assets generally protected), flat 28% tax rate, easier to sell or transfer ownership, professional credibility
Setup and ongoing compliance costs, director duties and personal liability for certain matters, public disclosure requirements
Businesses with growth ambitions, those with employees, businesses needing liability protection
Note: Limited liability isn't absolute. Directors can be personally liable for certain debts, and banks often require personal guarantees from shareholders.
Partnership
Two or more people (or entities) carrying on business together with a view to profit. General partnerships are governed by the Partnership Law Act 2019.
General Partnership
- All partners share management and liability
- Each partner personally liable for partnership debts
- Profits taxed at each partner's personal rate
Limited Partnership
- At least one general partner with unlimited liability
- Limited partners' liability capped at their investment
- Must be registered with the Companies Office
Trust
While trusts are primarily for holding assets rather than trading, some businesses use trading trusts. The trustees hold assets and run the business for the benefit of beneficiaries.
Special types of trusts, known as 'trading trusts' have (usually) a corporate trustee that trades. These are most common in professional service businesses.
Property investment, family businesses where income splitting is desired, asset protection planning
Trusts Act 2019 compliance obligations, trustee personal liability unless properly structured, 39% tax rate on retained trustee income
What we do at this stage
We explain each option in context of your actual situation - not generic advice, but what each structure would mean for you specifically. We help you understand the real differences.