10 Steps to Start Your NZ Business Right!

By On Your Terms co-founder Claire Bodle
December 2024

1. Write a business plan and budget

Business Plan 

A business plan can be as short (or long) as you like but it should cover:

• The problem you’re solving
• Your target market
• Your competitors (and how you can serve your target market better)
• How you’ll reach your target market
• Start-up costs
• Ongoing costs
• How you’ll meet your costs
• How you’ll scale and grow

Check out the free resources and template plan at www.business.govt.nz. Contact a financial consultant, budget planner or accountant if you need help.

Funding

Your three main options are:

• ‘bootstrapping’ (owners fund),
• raising capital from an investor who is issued new shares in your company, or
• borrowing money from a bank or other lender.

Investors such as venture capital funds or angels are looking for a ‘unicorn’ (ie, the next Xero) so are likely to want to see high potential for growth and global scale. If you've got funds to boot strap, the advantage is you maintain control and direction of your company. If you go for a bank loan – the bank will want security over an asset (such as your home) and you’ll need a plan to manage repayments.

Use our free Confidentiality Agreements to ensure any initial discussions with others about investment are kept secret, especially if you have a unique idea, concept, invention or trade secret to protect.

2. Decide your business structure

Do you want to operate as a:

• sole trader (you operate and manage the business as the sole owner – known as ‘self-employed’) or
• company (a separate legal entity owned by shareholders)

Our Guide to Business Structuring explains the difference and helps you choose the right structure for your business.

If you decide to incorporate a company, you’ll need to register it with the Registrar of Companies – our Guide to Incorporating a Company talks you through this easy process. If your company has more than one shareholder, a Shareholders’ Agreement or Term Sheet is essential to make sure everyone is on the same page from the get-go.

See also our Company Constitution and other company management documents, including director and shareholder resolutions, Share Transfers, Company Registers and Director Indemnity Bundle.

3. Choose your business name and protect it

Don’t spend money on branding, printing, and domain names without first checking if your name is available to use! Use ONECheck to see if it’s available as a business name, trade mark, web domain and social media username.

How to protect your name

• Domain names – if you’ll have a website, secure the domain names. An easy way to do this is to use a provider like Godaddy.
• Trade marks – To stop another business from using your name, a similar name, or your logo, you need to register a trade mark. You can do this yourself on the IPONZ website or get help from an expert. For more information on IP protection, see our Guide to Intellectual Property

4. Get your ID numbers

New Zealand Business Number

A New Zealand Business Number is a unique identifier for your business. If you’re a sole trader you can apply for an NZBN for free at www.nzbn.govt.nz. Companies are automatically allocated an NZBN when registered with the Companies Office.

IRD Numbers

If you set up as a sole trader, you can use your personal IRD number.

When you incorporate a company, you’ll need a separate IRD number and you’ll get given one as part of the incorporation process.

GST Number

If you sell more than $60,000 worth of products or services per year, you’ll need to register for GST. Your GST number will be the same as your IRD number. You can apply for a GST number at www.ird.govt.nz (it’s free). For further information on your ongoing tax obligations – see our Guide to Business Structuring.

If you hire staff, you’ll need to register with the IRD as an employer to deduct and pay PAYE on your employee’s behalf.

5. Add your Privacy Policy and Terms of Use to your Website

Make sure to put your Privacy Policy and Website Terms of Use up to comply with your obligations under the Privacy Act, protect your website content and make the rules around use of your website clear.

6. Protect your IP

Understanding intellectual property and licensing is crucial to protect your products or services, respect the rights of others and make sure you don’t get into legal trouble. Respect others’ work by making sure you obtain proper licences, or use copyright-free resources.

If you’re designing logos or branding, ensure your designs don’t infringe on existing trade marks by doing trade mark searches on IPONZ. Prevent others from using your name and logo by registering a trade mark (see above).

Determine whether you will transfer ownership of any copyright in your products or deliverables to your client/customer (and what licence rights you will need to keep) or retain ownership and licence your client the right to use the work. Then clearly set out IP rights in your customer/client terms and conditions.

If you’re creating something new and inventive, consider a patent.

See our Guide to Intellectual Property for further information.

7. Sort your T&Cs with your customers/clients

You need to have clear terms with customers/clients setting our your obligations (including scope, price, intellectual property rights) and your customer/client’s obligations to pay you. Make sure these are signed (or accepted by way of ‘tick this box to accept our terms’) before you provide your products/services.

Check out our Guide to Consumer Law in NZ to understand the mandatory promises your business automatically makes to consumers when they purchase your services (and what you must do if you fail to comply with these promises).

8. Set up a business bank account

Setting up a separate bank account will simplify record keeping and accounts, even if you’re a sole trader. If you set up a company, you’ll need to get your IRD number before you can set up your bank account.

9. Sign up to bookkeeping software and find an accountant

Register with an accounting platform like Xero or MYOB to manage your accounting records. Unless you are accounting savvy, you’ll also need an accountant to prepare your annual financial statements.

10. Sort your insurance

Boring, yes, but very important! Talk with an insurance broker to find out what insurance your business should have to stay protected from unexpected events or mistakes (professional liability) or other business loss.

Conclusion

Follow these 10 steps to set your business up for success. Starting a business is a challenge, but you’ll never look back! Good luck with your new venture!!!