When expanding your business internationally, New Zealand may not be at the top of your list, but the territory is becoming increasingly popular amongst entrepreneurs who want to take their businesses global. It is ranked as one of the easiest countries for incorporating and operating a business. Additionally, it boasts very low barriers to entry, so New Zealand makes sound business sense, particularly for firms in the imports and exports industry.
Today, we offer an overview of New Zealand’s fledgling economy and offer advice on how to start a business in the country, whether you’re a beginner looking to start up a new firm, or an experienced entrepreneur ready for overseas domination…
Brief Overview of New Zealand’s economy
New Zealand has the third freest economy in the world, according to the 2019 Index of Economic Freedom, thanks to its trade and labour freedoms that put it head and shoulders above the competition. The former British colony has a developed, but relatively small economy, when compared with neighbouring Australia, and indeed other nations around the world. However, what it lacks in size, it makes up in opportunities.
Following a slight dip in 2015, New Zealand has boasted a strong and stable GDP, with 2017 figures indicating more than US$200 billion. With a GDP per capita of US$42,940.58, the country sits comfortably between Canada and Australia with a large middle-class citizenship, resulting in strong demand for goods and services. Many of these goods and services are imported from other territories, fueled by several key free trade agreements and trade blocs. These trade agreements offer benefits to both New Zealand and foreign businesses.
New Zealand is the 46th largest importer in the world and the 45th largest exporter in the world, thanks to its strong agricultural sector. The country had a negative trade balance of US$2,078,152,964 in 2017 which demonstrates gaps in the internal market. Opportunities are created for foreign businesses to set up and manufacture goods and services to sell to local consumers, or import goods and services from their home country to add value, market, and sell at a premium.
Incorporating your Business
Incorporating a business in New Zealand is a relatively simple and straightforward process, with many entrepreneurs able to set up a business over the internet in a few hours. There are three main New Zealand business structures to consider – Sole Trader, Partnership, and Company. Each offers unique benefits, so you should do your research and understand the differences before getting started to ensure you choose the right structure.
Once you have determined that your business idea is viable and you’ve chosen a name, a structure, and incorporated on the Companies Office website, you’ll be given a New Zealand Business Number. Subsequently, you will be able to secure your business name and register for Goods and Services Tax. Businesses may also want to register their trademarks to protect their assets.
Companies incorporated in New Zealand must have at least one resident New Zealand or Australian director, although some companies appoint nominee directors to overcome this.
Companies must also have a physical address in New Zealand that can act as the firm’s Registered Office. New Zealand Companies Office inspectors may visit the premises to ensure you operate out of the site. One reason is to reduce corruption and ensure overseas-controlled firms are doing business in New Zealand, rather than setting up a company and moving back to their native territory. Therefore, appointing staff and focusing on recruitment is key when you get started – whether you appoint a company secretary, a marketing manager or a business development expert, your staff should be based out of your registered office to be compliant.
Entrepreneurs considering investing more than NZ$3 million in the first four years of their international venture are encouraged to apply for an Investor Visa in New Zealand. You must have at least three years’ business experience, be able to speak English, be an applicant of ESOL tuition, and be under the age of 65. Once your visa has been approved, you’ll be able to invest in a new business venture in the country and enjoy many of the same benefits as local entrepreneurs, though you may be subject to additional tax when distributing assets to foreign shareholders. Work with an NZ accountant to ensure you’re paying what’s necessary.
Although there is no minimum capital requirement to incorporate a business in New Zealand, you will be required to pay a fee of NZ$150 when registering your firm on the Companies Office website. Sole Traders and Partnerships can incorporate their businesses for free.
However, it is important to remember that whilst it’s possible to incorporate and establish a new business in the country for free, you should have enough funds to hire staff and market your new venture from day one. According to RadioNZ, the average salary in the country is NZ$49,000, but this can climb in sectors such as business development or marketing, where the average salary is closer to NZ$106,000. Without the necessary funds, you would have to take on too many tasks and responsibilities as an entrepreneur, watering down your potential and stunting your growth. Alternatives include hiring freelancers, remote staff, or working with a Professional Employer Organisation (PEO) to reduce initial recruitment and HR costs.
Whether you’ve incorporated a business in Australia and want to expand into New Zealand or you’re based on the other side of the world, opening a business bank account is critical for accounting and taxation purposes. Sole Traders may choose to use their personal bank accounts, although this can make reporting profit and loss complicated and time-consuming. Banks in New Zealand offer good customer service and great online banking, meaning that you can operate and monitor your expenditure even if you’re on the other side of the planet.
In addition, New Zealand’s banks have been rated as the second soundest in the world, so you do not have to worry about losing money. Many banking institutions offer multi-currency accounts, which makes it easier for Branch Office businesses to report on their finances.
HSBC and Citibank are two of the most well known international banks in the country, whilst ANZ and the Central Bank are also contenders. New Zealand has no foreign exchange controls, so there are no restrictions on transferring profits, capital, dividends or interest into and out of the country, but bear in mind that transfers above $10,000 are monitored by the Central Bank to reduce corruption and ensure compliance. Again, an accountant can ensure your business remains fully compliant whilst transferring profits back to your home country.
To open a corporate bank account, you’ll fill in an application form, provide evidence of your business, its registered office, and your residency, and you’ll be trading within a few days.
Let Biz Latin Hub Help
New Zealand may not be the most popular investment spot just yet, but its growing economy and impressive trade agreements make it an attractive destination for entrepreneurs. Give yourself the best possible start by working with the back office specialists at Biz Latin Hub.
Whether you need assistance with company incorporation, recruitment, accounting, or due diligence, you can depend on our New Zealand-based team seven days a week. To get started, email us on [email protected] for a personalised solution to your business needs.