How to Register a Sole Proprietorship (Sole Trader) in New Zealand

Working as a sole trader in New Zealand is appealing because you can start quickly, retain full control over your work, and keep most of your profits. There's far less paperwork than forming a company, and fewer ongoing compliance obligations.

On the flip side, being a sole trader means you carry all the liability yourself, and you’ll need to stay on top of taxes, insurance, and record-keeping. The benefits are simpler administration, flexibility, and often lower costs; the main challenges are personal risk and ensuring you meet all your obligations.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in New Zealand?

In New Zealand, the business structure equivalent to a sole proprietorship is called a Sole Trader. Sometimes it's also referred to as “self-employed” or “independent contractor.” All of these describe the same model: one person runs a business, makes the decisions, keeps the profits, and is personally responsible for debts or losses.

How does a sole proprietorship work in New Zealand?

Here are the main features of running a business as a sole trader in New Zealand, including registration requirements, tax rules, and the key pros and cons.

Sole proprietorship vs limited liability company in New Zealand

While operating as a sole trader is the simplest way to run a business in New Zealand, many people also consider forming a limited liability company. The table below highlights the key differences between the two structures to help you decide which best fits your situation.

Step-by-step guide: How to register a sole proprietorship in New Zealand

Step 1: Check if you are eligible

You must be a natural person (not a company or trust), over 18 (or having legal capacity), and able to work in New Zealand (citizen, resident, or appropriately permitted). If you've worked as an employee, you likely already have an IRD number. If not, you’ll need to apply.

Step 2: Get/or confirm your IRD number

Your IRD number is essential. If you don’t have one, you can apply via the Inland Revenue website. If you already have one from prior employment, you’ll use that same number when trading as a sole trader. Inform Inland Revenue that you are now self-employed, so they know to expect your sole trader income.

Step 3: Choose a business name (if desired)

You can trade under your own legal name without registering a business name. If you want a distinct business name, check its availability using the ONECheck tool. Once you've chosen a non-used name, you can use it on invoices, branding, etc. It’s optional but helps with professionalism.

Step 4: Register for GST if needed

If you expect your turnover (sales) to exceed NZ$60,000 in any 12-month period, you must register for Goods & Services Tax (15%). If you don’t expect to exceed that, you may optionally register earlier.

Step 5: ACC levies and other levies

As a self-employed person, you are automatically covered by ACC for personal injury cover. You’ll be charged ACC levies based on your liable earnings and the kind of work you do. After your first year, you’ll be invoiced, usually once a year.

Step 6: Record keeping, accounting, and tax returns

You must keep accurate records of all income and business expenses. At the end of each financial year (1 April to 31 March), file an IR3 with IRD to report profit (income minus expenses). If your income tax bill in a previous year was over NZ$5,000, IRD will expect you to pay provisional tax in installments through the year.

Financial and tax obligations for sole traders in New Zealand

• Income Tax: Your profits (income minus eligible expenses) are taxed as an individual. New Zealand uses progressive rates (for example, 10.5%, 17.5%, etc.). You file via return IR3.

• GST: Mandatory if turnover > NZ$60,000/year. The rate is 15%. If registered, you collect GST on your invoices, can reclaim GST on eligible expenses, and file GST returns (monthly / two-monthly / six-monthly depending on your turnover).

• ACC Levies: As a sole trader you pay ACC levies based on your liable earnings and the risk class of your work. These cover your cover for injury.

• Provisional Tax: If your income tax bill last year exceeded NZ$5,000, you’ll need to pay provisional tax in instalments across the year.

• Record-Keeping: Maintain receipts, invoices, bank statements, and business records (often for several years). These are needed for tax, GST, expense claims, and ACC calculations.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
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• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start as a sole trader in New Zealand?
There is no minimum capital requirement. You can begin trading with very little – once you have your IRD number, you can start offering goods or services.

Do sole traders need to register for GST?
Yes, if you expect your turnover to exceed NZ$60,000 in any 12-month period. If not, registering for GST is optional. business.govt.nz+1

How much are the standard monthly or annual contributions (ACC etc.)?
ACC levies depend on what you earn (your liable income) and the industry risk class of your work. There’s no fixed “one size fits all” number – ACC will calculate what you owe, and you’ll be billed annually (or according to their schedule).

Can a sole trader hire employees?
Yes. If you employ staff, you’ll need to register as an employer with Inland Revenue, deduct PAYE, make employers’ contributions, and meet health & safety and employment law obligations.

How long does it take to register as a sole trader in New Zealand?
Very quickly. Technically you can begin trading immediately once you have your IRD number and have told IR that you are self-employed. GST registration (if needed) can be done online. The process often takes a few hours to a few days (depending on how fast you gather identity documents etc.).

Can foreign nationals register as sole traders?
Yes, generally. Foreign nationals with the right immigration / work status in New Zealand can be a sole trader, but you’ll want to make sure your visa allows business activity. Also you’ll need an IRD number, proof of identity, and possibly other permits depending on what you’re doing.

Do sole traders need a separate business bank account?
Not legally mandatory. However, having a separate bank account—business or just a dedicated personal account for business—makes accounting easier, helps with clarity, and looks more professional.

What happens if I stop working as a sole trader?
You should notify IRD that you are no longer trading/self-employed. Complete any final tax returns, settle any outstanding ACC, GST, or provisional tax obligations. Close or archive your business-name accounts if you used one.

Are there government incentives or reduced rates for new sole traders?
New Zealand has some support systems and advice services for small businesses via government websites. But as of 2025, there isn’t a universal “zero tax first year” or sharply reduced rate just for newly formed sole traders. Some regional bodies or industry schemes might offer assistance.

Can I use Deel as a sole trader in New Zealand to get paid by international clients?
Absolutely. Deel supports sole traders in New Zealand. You can receive payments from clients overseas, issue invoices in multiple currencies where legal, and use Deel’s tools to ensure compliance with local tax and invoicing requirements.

Does Deel generate compliant invoices for sole traders?
Yes. Deel’s invoicing tools are designed to meet New Zealand legal and tax requirements, including GST if you’re registered, and the details Inland Revenue expects on invoices.

Can Deel help me with taxes as a sole trader in New Zealand?
Yes. Deel provides records, downloadable reports, payment history, and tools to support your tax filing. While Deel isn’t a substitute for an accountant, using these tools can simplify your tax obligations.

Does Deel offer contracts for freelancers and sole traders?
Yes. Deel provides contract templates that are legally safe for use in New Zealand, helping protect both you and your clients.