Going self-employed or starting a business in New Zealand

I’ve never had a normal payslip in New Zealand. From the week we landed, I was self-employed, and within a couple of years I was running a small marketing business, 3WhiteHats NZ, which years later became 3WH. That meant learning both sides of this at once: how to pay my own tax, GST and ACC as a sole trader, and then, once the business grew, how to be the one paying PAYE, KiwiSaver and ACC levies for a team of other people. This guide is built from doing both, checked against current Inland Revenue, Companies Office and ACC settings for 2026 rather than relying on what I remember from year one, because several of the numbers have genuinely moved since we started out.

One thing up front, because it matters more than almost anything else on this page: being able to legally work for yourself in New Zealand depends entirely on your visa status. We’ll come back to that in detail, but don’t skip past it assuming self-employment is simply a business decision. For a lot of readers, it’s a visa decision first.

In this article we discuss:

• Sole trader vs limited company, and what actually differs
• Getting your IRD number sorted and the tax basics
• Provisional tax and terminal tax, in plain English
• GST registration at the $60,000 threshold
• ACC levies for the self-employed
• Expenses, record-keeping and invoicing
• KiwiSaver when you’re self-employed
• Hiring your first employee
• The visa reality check

Sole trader vs limited company

This is the first real decision, and it’s worth getting right rather than defaulting to whatever a friend did. I started as a sole trader, which is how most people in New Zealand begin, and only incorporated once the business had grown enough that limiting liability and separating my finances from the company’s actually mattered.

As a sole trader, you and the business are legally the same person. There’s no separate registration beyond telling Inland Revenue you’re trading and using your personal IRD number for everything. It costs nothing to set up. The trade-off is that you’re personally liable for the business’s debts; if something goes wrong, your own assets are exposed, not just the business’s.

A limited company is a separate legal entity, registered through the Companies Office. You reserve a company name online (NZD $11.50 including GST) then apply to incorporate (NZD $136.55 including GST, which bundles in a few small statutory levies), so budget roughly NZD $148 all up. After that there’s an annual return to file each year (about NZD $57.20 including GST if you file it yourself), plus proper financial statements, real accounting cost on top of the government fees. A company pays a flat 28% tax rate on retained profit, but the moment you draw money out as salary or dividends, that’s taxed again at your personal rate, so the 28% headline figure isn’t simply “better” than sole trader rates; it depends entirely on how much you leave in the business versus take out.

	Sole trader	Limited company
Setup cost	Free	About NZD $148 (name reservation plus incorporation)
Legal identity	Same legal person as you	Separate legal entity
Liability	Personal, unlimited	Generally limited to the company
Tax on profit	Personal income tax rates, 10.5% to 39%	Flat 28% on retained profit; personal rates apply again on what you draw out
Ongoing filing	Your own IR3 each year	IR3/IR4 company return, annual Companies Office return, proper financial statements
ACC	CoverPlus, based on your IR3 income	Separate shareholder-employee cover product
Suits	Starting out, testing an idea, straightforward contracting	Higher turnover, real liability exposure, planning to hire, wanting business and personal finances properly separated

Figures checked against Companies Office and Inland Revenue published rates, 17 July 2026.

My own rule of thumb, for what it’s worth after years of watching other self-employed friends make this call: if you’re testing an idea, contracting on the side, or your annual profit is modest, start as a sole trader. It’s genuinely simpler and you can always incorporate later once there’s something worth protecting. We only made the switch once the business had employees, contracts and a level of risk that made the personal liability of staying a sole trader feel reckless.

IRD number and tax basics for the self-employed

You need an IRD number before you can do anything else, self-employed or not. If you’re newly arrived, Inland Revenue has a streamlined process for new arrivals that checks your identity directly against Immigration New Zealand records rather than making you post in documents twice; our guide to setting up in New Zealand: IRD, bank and phone covers that step by step.

The core difference from being an employee is that nobody deducts tax from your income before it reaches you. As an employee, PAYE does that automatically. Self-employed, you’re paid gross and responsible for setting money aside and paying it to Inland Revenue yourself, the single biggest habit change for anyone coming off a payslip. I’d genuinely recommend moving a fixed percentage, somewhere around 25 to 30% depending on your income level, into a separate savings account every time you get paid, and never touching it. It sounds obvious written down. It’s much harder to actually do when the money is sitting in your main account and a bill needs paying.

Your income tax rates as a self-employed sole trader are exactly the same progressive personal rates everyone else pays, from 10.5% on the first slice of income up to 39% on income over $180,000; our fuller income tax in New Zealand explained guide breaks the bands down. What changes for the self-employed isn’t the rate, it’s the timing and the paperwork: you’ll file an annual Individual income tax return, an IR3, rather than having Inland Revenue reconcile everything automatically the way it does for most employees.

Provisional tax and terminal tax, in plain English

This is the part that catches almost every newly self-employed person off guard, myself included, in year two.

Provisional tax is advance income tax, paid in instalments during the year rather than as one lump sum after your return is filed. You become a provisional taxpayer once your residual income tax, broadly the tax you owed after your return, minus anything already deducted at source, exceeds $5,000 in a prior year. Most genuinely new sole traders don’t hit this in their very first year, because there’s no “prior year” figure yet to trigger it. It’s the second year that tends to be the shock: you’re paying tax on last year’s income and provisional tax toward this year’s income at more or less the same time, because the system has caught up with you.

Terminal tax is simply the final settling-up figure, the balance left over once your provisional payments and any other tax paid during the year are accounted for. For most people it’s due on 7 February the following year, or 7 April if you’re filing through a registered tax agent, one of several reasons plenty of self-employed people here use an accountant even for a simple sole trader setup. The two extra months of breathing room alone can be worth the fee.

Your first year in business is not tax free, but early voluntary payments toward what you expect to owe can earn a small discount, and it stops the year-two double-hit landing as hard. Set money aside from invoice one, not from the point Inland Revenue tells you to.

GST registration at the $60,000 threshold

Goods and Services Tax, GST, is New Zealand’s consumption tax, charged at 15% on most goods and services. As a sole trader or company, you must register once your turnover reaches, or you reasonably expect it to reach, NZD $60,000 in any rolling 12-month period, not your financial year specifically, any 12-month window. You can register voluntarily below that threshold too, which some self-employed people do early because it lets you claim back GST on business expenses and equipment from day one, at the cost of extra filing.

Once registered, you add 15% GST to what you charge, claim back the GST you’ve paid on business purchases, and pay Inland Revenue the difference, typically every two months, though monthly and six-monthly filing options exist. Miss the threshold and don’t register within a reasonable window, and Inland Revenue can back-date your registration and the tax owed, a genuinely unpleasant letter to receive. If you’re anywhere near $60,000 in trailing turnover, register before you’re asked to, not after.

ACC levies for the self-employed

This is the one part of self-employment that genuinely surprised me the first year, because nobody had explained it before the invoice landed. If you’re self-employed or contracting, you’re automatically placed on ACC’s standard CoverPlus product. If you’re injured and can’t work, CoverPlus pays weekly compensation of up to 80% of your taxable income, based on your most recently completed financial year’s IR3 figures, starting about a week after the injury.

ACC calculates your levy from the earnings Inland Revenue reports to them off your IR3, combined with your business’s classification unit, essentially what industry and type of work you do, because riskier trades pay a higher work levy than office-based consulting. Your invoice normally lands around September each year, after your return is filed, and bundles together the earners’ levy (a flat rate for everyone, currently $1.75 per $100 of earnings for the year running 1 April 2026 to 31 March 2027, capped at $156,641 of annual earnings), the work levy specific to your industry, and a smaller working safer levy.

If standard CoverPlus doesn’t suit your income or risk profile, CoverPlus Extra (CPX) is the optional alternative: you nominate your own cover amount up front rather than letting it default to 80% of last year’s declared income, useful if your income is genuinely variable or you want more certainty about what you’d receive if you couldn’t work. Worth a conversation with an accountant or ACC directly if your income swings a lot year to year.

Expenses, record-keeping and invoicing

Keep every receipt and keep them well organised. Inland Revenue expects you to hold business records for at least seven years, and a shoebox of fading paper receipts is not a system, it’s a liability. Cloud accounting software (Xero is what we used and still recommend) makes this genuinely painless once it’s set up, and most self-employed New Zealanders use something similar rather than a spreadsheet.

Broadly, you can claim expenses that are genuinely for the business: a proportion of home office costs if you work from home, a proportion of vehicle costs if you use your own car for work (either through a logbook establishing your business-use percentage, or Inland Revenue’s published mileage rate for the first block of kilometres), software, professional fees, and equipment. The general principle is that an expense has to be incurred in earning your income; purely private spending doesn’t qualify just because it happened during a working week.

Invoicing is straightforward once you’re set up: your invoices need to show your name or business name, an invoice number, the date, a description of what was supplied, and if you’re GST registered, your GST number and the GST charged. Get into the habit of invoicing promptly and chasing late payment early. Cashflow, not tax, is what actually sinks small self-employed businesses in the first couple of years, and slow-paying clients are the most common cause.

KiwiSaver when you’re self-employed

Nobody enrols you automatically the way an employer does, so you have to opt in yourself, and there’s no employer matching your contributions because, in this context, you are the employer and there isn’t a separate one to match anything. You can make voluntary contributions directly to your KiwiSaver provider, or through Inland Revenue, at whatever amount and frequency suits your income.

The government contribution (previously called the member tax credit) is worth knowing about precisely because the figure has changed recently and a lot of older advice online is now out of date. As of the KiwiSaver year running 1 July 2025 to 30 June 2026 and beyond, the maximum annual government contribution is NZD $260.72, roughly 25 cents for every dollar you contribute yourself, up to that cap. To get the full amount, you need to have contributed at least NZD $1,042.86 of your own money in that same 1 July to 30 June period. That maximum was halved from the previous NZD $521.43 following a government policy change from 1 July 2025, so if you’re working from an older guide or a well-meaning friend’s memory, the number they’ll quote you is probably wrong.

If you later incorporate and become a shareholder-employee of your own company, paying yourself a wage through PAYE, KiwiSaver rules shift again: your company can then make employer contributions on your behalf the same as it would for any other staff member, at the same minimum rate covered below.

Hiring your first employee

This is where I learned the most, because it’s a genuinely different job to being self-employed yourself. The moment you take someone else on, you become an employer with legal obligations that have nothing to do with your own tax return.

You need to register as an employer with Inland Revenue and get an employer number before your new hire’s first payday. Every employee needs a written employment agreement, a legal requirement covering pay, hours, leave entitlements and the usual employment basics properly, not a paragraph dashed off in an email. From there you’re deducting and paying PAYE on their behalf, filing employment information within two working days of each payday, and keeping full wage records for seven years.

KiwiSaver becomes your responsibility too, for eligible staff who are enrolled or opt in. As their employer, you must match their contribution at the current minimum rate, which rose from 3% to 3.5% of gross pay from 1 April 2026, with a further rise to 4% scheduled for 1 April 2028. That’s real, ongoing payroll cost on top of wages, easy to underestimate when budgeting a new hire’s total cost for the first time.

ACC changes shape again once you’re an employer. Rather than paying the earners’ levy yourself the way you did as a sole trader, your employees’ earners’ levy comes off their pay through PAYE, while you’re separately invoiced for the work levy and working safer levy based on your total payroll and industry classification. Budget for it as a real cost of payroll, not an afterthought.

None of this is meant to put you off hiring. It genuinely changed the business for the better once we did. But go in knowing it’s a step up in responsibility, not just a bigger invoice to a contractor, and budget the true cost of an employee, wages plus KiwiSaver plus ACC plus accounting overhead, before you commit to the number in the job ad.

The visa reality check

Here’s the part that matters most if you’re reading this from overseas rather than already living here: being self-employed in New Zealand is not automatically something your visa lets you do, and it is not, on its own, a route to a longer-term visa either.

Only residents, citizens, and people on a visa with genuinely open work conditions can legally be self-employed in New Zealand. A standard working holiday visa does not allow it; the conditions explicitly exclude operating a business as an owner. Most Accredited Employer Work Visas don’t allow it either; a job offer for self-employed work is specifically excluded from what qualifies you for an AEWV in the first place. If your visa doesn’t carry open work conditions, self-employment isn’t a workaround, it’s a visa breach, and Immigration New Zealand treats it as one.

There’s also a recent, important change worth flagging if residence is part of your longer-term plan. Under Skilled Migrant Category changes confirmed for 24 August 2026, evidence of self-employment cannot be counted as directly relevant work experience under the two new residence pathways, the Trades and Technician pathway and the Skilled Work Experience pathway. Immigration New Zealand’s stated reasoning is that self-employment is harder to independently verify than employed work, so from that date, years spent running your own business, however genuinely skilled, generally won’t count toward the experience these newer pathways require. If your plan is to work for yourself now and use that time to build toward residence later, that plan needs rethinking; talk to a licensed immigration adviser about what does count first.

If you hold a visa with open work conditions and want to invest in or start a business here properly, Immigration New Zealand has separate visa categories built for that; our overview of New Zealand visas explained is a starting point, but this is genuinely worth a direct conversation with Immigration New Zealand or a licensed adviser, not something to assume your way through. Getting the visa question wrong here is a far bigger problem than getting a tax detail wrong.

Your questions answered

Can I be self-employed on a partner or spousal work visa? It depends entirely on whether that visa carries open work conditions. Some do, some don’t. Check the specific conditions listed on your visa, or with Immigration New Zealand directly, before assuming a partner visa automatically allows it.

Do I need an accountant as a sole trader, or can I do it myself? Plenty of sole traders with simple, single-income setups manage their own IR3 and GST through Inland Revenue’s myIR portal without one. Once provisional tax, GST and genuine business expenses are all in play together, most people find an accountant’s fee pays for itself in time saved and in avoiding costly mistakes, particularly around provisional tax in year two.

What happens if my turnover drops back below $60,000 after I’ve registered for GST? You can apply to cancel your GST registration if your turnover is genuinely expected to stay below the threshold, but you don’t have to; plenty of businesses stay voluntarily registered because it lets them keep claiming GST on expenses.

Can I claim ACC compensation for stress or a gradual illness, not just an accident? Generally no. ACC covers accidental injury, not general illness or gradual-onset conditions, which is a genuine gap self-employed people sometimes don’t realise exists until they need income protection for something ACC doesn’t cover.

Should I pay myself a salary from my own company, or just draw money as needed? As a shareholder-employee, you can structure this either way, and the right answer depends on your income level, tax planning and KiwiSaver goals. This is exactly the kind of decision worth a proper conversation with an accountant rather than a rule of thumb from a blog post.

Is there a minimum income before I have to register as a business at all? No minimum threshold exists for simply notifying Inland Revenue you’re self-employed and using your IRD number; that obligation starts from your first dollar of business income, regardless of how small.

Can I be a sole trader and an employee at the same time? Yes, plenty of people run a side business alongside a PAYE job. You’ll have income taxed two different ways at once, your salary through PAYE and your self-employed income through your own return, so keep the two clearly separated in your records from the start.

The bit we can’t write for you

Everything above is how the system works and how we’ve navigated it ourselves over a decade of being self-employed and, later, an employer in New Zealand. It isn’t personalised tax or immigration advice, and it shouldn’t replace either. Tax settings, ACC levies and visa rules all move, sometimes significantly, as several of the figures in this guide already have in the past year alone. Confirm anything that matters to your own situation with Inland Revenue, the Companies Office, ACC or a licensed immigration adviser directly before you act on it, and if you’re weighing up the whole move rather than just the business side, our full guide to moving to New Zealand is a reasonable place to start. For KiwiSaver decisions specifically, see our pros and cons of the KiwiSaver scheme.

We’re working on a fuller, paid guide that goes deeper into running a small business here: pricing, contracts, the accountant relationship, and what we’d genuinely do differently a second time round. If that would be useful to you, or you’ve got a specific question this page hasn’t answered, get in touch through our contact page.