How to form a company in NZ yourself for only $160.22
How to form a company in NZ yourself for only $160.22
Starting out in business? Rather than spend money with your lawyer or accountant on forming a company, do it yourself online for only $160.22.
That way, you’ll also be able to manage your annual company filing obligations yourself, saving yourself on those on going compliance costs you’ll fork out to your accountant or lawyer every year (for more on this check out our article “How to file an annual return with the companies office – for $45”).
But before you do that, consider using the money you’ll save forming your own company getting some sound advice on your new business. This would be money well spent – most businesses fail within five years, and the leading cause is simply because businesses don’t tend to spend enough time planning at the beginning.
Get this advice before you form your company – consider talking to a professional business advisor, a lawyer, an accountant, a banker, and even a marketing advisor about your plans. Here’s the great news. If you’re new to business these initial appointments should be free.
For a little guidance, companies have directors and shareholders. Directors are the people who run the company. Shareholders are the people who own the company.
The number of shares allocated to each shareholder should represent their interest in the company. Also, majority shareholders decide who will be the director(s) of a company.
Directors can be shareholders. Often in a family mum-and-dad business, both partners will be a director and hold 50% of the shares each.
Right, by now you have taken some advice, understand what you are trying to achieve, and you’re ready to set up your company. Here’s how.
Set up an igovt login.
You’ll need this to form a company.
Visit http://www.business.govt.nz/companies/app/ui/pages/logon/register to get started.
Reserve a company name.
Once you have set up your igovt login and are logged in, visit http://www.business.govt.nz/companies/app/ui/pages/reservations/names to reserve a company name.
Most people set up an NZ Limited Company. Pick a name that represents what your business is all about.
For example, if your name was John Smith and you were a property investor, you might pick “Smith Properties Limited”. If you are setting up a restaurant called Smith and Wesson, you might choose “Smith and Wesson Limited”.
Sometimes the name you would like to choose is taken. In these cases you could add the year you’re starting out to the end of the name you have chosen.
For example, “Smith Properties 2012 Limited”, or “Smith and Wesson (2012) Limited”.
Use your debit or credit card to pay the name reservation fee of $10.22.
You’re done! Once approved by the companies office, you’ll be notified by email and you’ll be able to move on to Step 3.
Incorporate your company.
Once your name is approved, log in and then visit http://www.business.govt.nz/companies/app/ui/pages/registration/companyName?entityType=LTD
Select the number of directors and shareholders, and the number of shares to allocate to your new company
When selecting the number of shares, usually 100 shares to allocate is enough. It also makes it easy to work out the percentage each shareholder will be allocated.
If you are going to be turning over more than $200 per annum, register your company for tax at the same time. This will save yourself time later.
Enter company addresses. A registered office is where company records are kept. It is OK to make this your home or your place of business rather than your accountant’s or lawyer’s office.
Your address for service is the address where legal documents can be served. The address for communication is the address used by the Companies Office to communicate with you. All of these addresses can also be the same address as your registered office.
Enter your email address. This is the email address used by the Companies Office to communicate with you later. It is not provided to anyone else.
Select your annual return filing month. I recommend selecting March as this is the end of the tax year.
Set up directors. You will need the IRD numbers of directors if they are New Zealand residents
Set up shareholders. As a shortcut, if the directors are also the shareholders, just select them from the list provided.
Set up shareholder allocations. Select the percentage of the shares to be allocated to each shareholder.
Decide on a constitution. A constitution is not mandatory. If you choose not to have a constitution, your company will fall under standard Companies Act legislation. Many companies choose not to have a constitution.
Set your BIC code. To find your BIC code visit http://www.businessdescription.co.nz/
Apply for an IRD number
Apply for GST. If you are going to apply for GST I recommend Invoice basis, Six-monthly GST returns or bi-monthly returns, as this will save on compliance costs.
Review and pay. Make your payment of $150.00 by credit or debit card to incorporate your company.
Sign consents and fax back to the Companies Office. These will be emailed to you.
Once completed, fax back or upload consent forms to the Companies Office website.
Congratulations. You’re done!
This guide is a simple overview. For more detailed information on forming companies visit http://www.business.govt.nz/companies/learn-about.