Register As A Sole Trader In New Zealand: Step-By-Step Guide

Published Wednesday 26 November 2025

Table of contents

• What is a sole trader?
• Pros and cons of being a sole trader
• Before you register as a sole trader
• How to register as a sole trader
• FAQs on registering as a sole trader

Key takeaways

• Register with Inland Revenue as your primary step, and automatically enroll in ACC coverage which provides weekly compensation if accidents prevent you from working.

• Apply for GST registration if your business earns $60,000 or more annually, as this is mandatory and failing to register can result in legal penalties.

• Understand that as a sole trader you have complete personal liability for business debts, meaning your personal assets are at risk if the business fails.

• Prepare for ongoing obligations including managing your own taxes, paying ACC levies, and maintaining detailed records of income and expenses from day one.

What is a sole trader?

A sole trader is the single owner of a business with complete control over all decisions and operations. You have no business partners or directors.

You can hire employees as a sole trader. The "sole" refers to ownership, not workforce size.

Most small businesses, contractors, and self-employed people start as sole traders. Many later transition to partnerships or companies as they grow.

Pros and cons of being a sole trader

Sole trader structure offers simplicity and complete control, but comes with personal liability risks.

Pros:

• No setup costs: Zero registration or legal fees to establish your business structure, unlike limited companies which are required to pay an annual fee of $49.74 (plus GST) to file a return.
• Complete ownership: All profits belong to you (losses too)
• Simple tax handling: Business income treated as personal income through your existing IR account
• Employee benefits: Access to parental leave and other government benefits

Cons:

• Personal liability: Your personal assets are at risk if the business fails
• ACC responsibility: You pay levies for yourself and any employees
• Investment limitations: Must change structure to bring in investors
• Sale complexity: Harder to sell, especially niche businesses requiring specific expertise

Before you register as a sole trader

Prepare before you register to make the process smoother and set yourself up for success.

Check if sole trader is right for your situation

The sole trader structure is the simplest way to get started, but it’s not the only option. The main thing to know is that as a sole trader, you and the business are legally the same. This means you’re personally responsible for any business debts. If you’re looking for more protection for your personal assets, you might consider setting up a company instead.

Gather required information and documents

You only need a few key details. Have your Inland Revenue (IR) number ready. If you do not have one, apply for it first. You also need to know your business industry or activity to help set your Accident Compensation Corporation (ACC) levy rate.

Understand your ongoing obligations

Registering is just the first step. As a sole trader, you’ll be responsible for managing your own taxes, paying ACC levies, and keeping good records of your income and expenses. Getting clear on these duties from day one will help you stay on top of your finances and avoid stress later on.

How to register as a sole trader

Sole trader registration establishes your legal business status with government agencies. The process involves three phases:

Phase 1: Core registration

• IRD notification: Inform Inland Revenue you’re operating as a sole trader
• GST registration: Required if earning $60,000+ annually (optional if earning less)

Phase 2: Additional registrations (if applicable)

• Employer registration: Required only if hiring staff
• Professional licensing: Industry-specific qualifications and registrations

Phase 3: Ongoing compliance

• ACC coverage: Automatic enrollment with annual levy payments
• Business permits: Local council licenses for specific business types

Inland Revenue (IR) tasks

Most tasks to register as a sole trader are done through Inland Revenue. Inland Revenue will send your details to ACC for your business set-up.

IRD number

Most people already have an IRD number from previous employment, banking, or KiwiSaver accounts.

If you have an IRD number: Simply notify Inland Revenue that you’re now operating as a sole trader.

If you don’t have an IRD number:Apply through Inland Revenue before proceeding with sole trader registration.

Register for GST

GST registration is mandatory if your business earns $60,000+ annually (or expects to within 12 months). Failing to register when required can result in legal penalties.

Optional registration: Businesses earning under $60,000 can still register voluntarily to claim back GST paid on business expenses.

Next step: Use IR’s myIR service to manage and pay GST online once registered.

Read more about goods and services tax (GST)

Register as an employer

Register as an employer with Inland Revenue if you hire staff. Read more about registering as an employer. IR will ask if you need to register for fringe benefit tax (FBT) if you provide employees with certain benefits, and the employer superannuation contribution tax (ESCT). The ESCT is deducted from contributions you make to any employees’ KiwiSaver.

Licences and permits

You may need licences or permits from central or local government bodies to legally operate your business. For example, you need a food licence to run a food business, or an alcohol licence to sell alcohol. Check with your local government website or the Compliance Matters website.

Professional qualifications or registrations

Depending on your business, you may need a professional qualification or registration. For example, if you want to operate as an electrician, you need to be registered and licensed with the Electrical Workers Registration Board (EWRB). If you want to run your own physiotherapy business, you must be registered and hold a current annual practising certificate issued by the Physiotherapy Board. Check with your industry bodies for their requirements.

ACC levies

ACC coverage is automatic for sole traders through the CoverPlus program, providing weekly compensation if you can’t work due to accidents.

How it works:

• Automatic setup: Inland Revenue shares your details with ACC
• Levy calculation: Based on your work type and earnings
• Payment schedule: First invoice after filing tax return, then annually in July/August

Managing your account:Register for MyACC for Business to verify your details and manage levies online.

Business name

You don’t have to register your business name or trading name if you’re setting up as a sole trader. Your business name can be your own legal name – Moana Bradley, for example. Or you can have a trading name that customers know you by – 'Moana Bradley Plumbing Services'. Just don’t use restricted words or infringe any trade marks. Check available business names, trade marks and domain names with OneCheck.

Optional: NZ Business Number

As a sole trader you can also apply for a New Zealand Business Number (NZBN). This is a unique identifier, which any business in New Zealand can have. Your NZBN will link to your core identifying information such as trading name, phone number and email.

Having an NZBN will speed up your dealings with the government, suppliers and customers, and other businesses, for example, when sharing invoicing details. They can look up your information and you won’t need to repeat it or update it in multiple places.

FAQs on registering as a sole trader

Below are answers to common questions about registering as a sole trader.

How much does it cost to register as a sole trader?

You can register as a sole trader in New Zealand for free. Tell Inland Revenue (IR) you are earning income as a sole trader. You may need to pay for specific licences or professional registrations, depending on your industry.

How long does the sole trader registration process take?

Notifying Inland Revenue (IR) that you are a sole trader is quick and can be done online through your myIR account. Getting licences or permits may take longer, depending on your industry and local council.

What happens if I don’t register when I should have?

If you earn income but do not tell Inland Revenue (IR), you may face penalties for unpaid taxes or not registering for goods and services tax (GST) if you earn over the threshold. Set up your business correctly from the start to avoid problems later.

Can I change from a sole trader to a company later?

Yes, you can change from a sole trader to a company later. Many businesses start as sole traders and move to a company structure as they grow, bring in partners or investors, or want more legal protection. An accountant can help you with this process.

Do I need to register a business name as a sole trader?

No, you do not have to register a business name. You can trade under your own legal name. If you use a different trading name, check that it does not infringe on an existing trademark.