Should I operate as a NZ sole trader or form a company?

This is one of the most important decisions for a NZ self-employed person. Here's a comparison: **Sole Trader:** - Simple and cheap to set up (just an IRD number — no registration cost) - No separation between your personal and business assets/liabilities - Pay income tax at your personal rates (10.5% to 39%) - Less compliance (one IR3 instead of two separate tax returns) - Business losses offset against other personal income **Company (Ltd):** - Pays company tax rate: 28% (flat) - Separates personal and business liability - More complex: must file separate company tax returns (IR4) - Can be more tax-efficient at higher income levels (NZ$100,000+) - Directors can pay themselves salary (PAYE) and dividends - Requires registration with the Companies Office (NZ$165) **When a company may save tax:** At higher incomes (above approximately NZ$70,600), the company tax rate (28%) can be lower than your personal marginal rate (33%). However, you pay personal tax when money comes out as dividends, so the benefit depends on your specific situation. For most sole traders earning under NZ$100,000, operating as a sole trader is simpler and often just as tax-efficient. Consult a NZ tax agent for personalised advice.

• Sole trader: simple, personal tax rates (10.5–39%), no separation of liability
• Company: 28% flat corporate tax rate, personal/business liability separated
• Companies: additional compliance, separate returns required
• Above ~NZ$70,600 a company may offer tax advantages
• Seek professional advice before changing structure