The legalities of your new home business

Last week we looked at some of the different types of work you could do while raising your young family. Some are perfect to fill in the months of maternity leave, while some have the potential to become a full-time job to support your family for years to come.

I’ve met loads of lovely small business owners over the last 9 years, and some have gone on to be very successful, which is very inspiring!

As a part of several supportive online business networks, it is alarming how many people aren’t aware of tax implications and other obligations of running a new business. We would hate to see you get into trouble or have your new business cost you lots of money, when the intent was to support your family! So here at The Motherhood Project, we highly reccomend you seek advice from professionals along every step of the journey in your business!

I hope some of the following helps you to understand why you will need the advice of your accountant or lawyer as you prepare your new business!

 

In New Zealand, it is relatively easy to set up a new business, and costs very little to conform to laws. It always pays to go through everything with your lawyer and accountant to ensure you have covered your own obligations.

The most important thing to remember, tax-wise, is that you are in business from the time you start trading/selling/charging for your services. Whether you make a dollar or lose $50, you are still in business and still liable to fill in a tax return.

 

When you set up your business, you can choose how to structure it:

*Sole trader –  you own your own business, are liable for its debts, and it is very easy to set up.

All you need is a personal IRD number, the right licences and permits (if applicable) and the right qualifications for your trade or profession, and you can start promoting your skills.

Find out more on business.govt.nz

*Partnership – when you set up your business with someone else, and you both put in assets/resources, and you share the profits and losses.

Partnerships see two or more entities (eg: individuals or companies) share the profits and losses of an unlimited liability business, with each partner taxed on their individual share of the net profits at the end of the financial year.

Find out more at http://www.business.govt.nz/starting-and-stopping/business-structures/focus-on-partnerships

*Companies – a business structure separate from its shareholders, and a legal entity in its own right. Every company is registered with the NZ Companies office, and has legal responsibilities.

 

Find a good accountant whom you trust, and talk to them about your new business idea. They will be able to help you decide on your business structure, highlight your tax obligations, and help you ensure you meet your obligations from the start. It is much easier to run your business well from the start, than to have to go back and put things in order. Think of this first meeting with your accountant as an investment in your new business, and in yourself.

Talk to a lawyer if you think you will need licenses, permits or consents – for example, health and safety, food safety, environmental obligations, business buildings etc.

It will also pay to know a little about employment laws and obligations if you are looking at employing people to work for you.

 

You can find more about the legalioties of setting up your own home business from

http://www.business.govt.nz/

https://www.nzte.govt.nz/

http://www.ird.govt.nz

 

Mature business male conducting a meeting

 

Ashlee currently writes a parenting column for her local newspaper, runs Facebook page ‘Ministry of Lunchboxes’ and blogs at www.phraseology.co.nz 

 

 

 

 No part of this article is intended to replace legal advice. The information in this article is given in good will to encourage those intending to start a new business to seek out the information they require to conform to legal requirements. The information was correct at time of publication, which may not be the original date of this blog post. We take no responsibility for your actions as a result of this article.

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