How to register as a sole trader in NZ: tax, GST, ACC

Published Friday 17 April 2026

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

• Recognize that registering as a sole trader in New Zealand is free and straightforward — simply notify Inland Revenue through myIR, and your ACC coverage will be set up automatically at the same time.
• Register for GST as soon as your business turnover reaches $60,000 in a 12-month period, or voluntarily register earlier if you have significant start-up costs so you can claim back GST on business expenses.
• Understand that as a sole trader, you and your business are legally the same entity, meaning your personal assets — including your home — are at risk if the business takes on debt you can't repay.
• Track all income and expenses from day one and set aside funds for income tax and ACC levies, so you're not caught off guard when your first bills arrive after filing your tax return.

What is a sole trader?

A sole trader is the simplest business structure in New Zealand, where one person owns and runs the business. You have complete control over all decisions and keep all profits, but you're also personally responsible for any debts.

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

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

Pros and cons of being a sole trader

Sole trader structure gives you the simplest set-up and full control over your business, but your personal assets are at risk if things go wrong. Here's what to weigh up before deciding.

Pros

• Zero set-up costs: No registration or legal fees to establish your structure, unlike companies that pay $49.74 (plus GST) annually to file a return
• Full profit ownership: All business profits belong to you, though losses do too
• Simplified tax handling: Business income flows through your personal IR account as personal income
• Government benefit access: Eligibility for parental leave and other employee benefits

Cons

• Personal liability exposure: Your personal assets, including your home, back any business debts
• ACC levy responsibility: You pay levies for yourself and any employees you hire
• Investment structure: Bringing in investors requires changing to a company structure
• Sale process: Selling your business takes more planning, especially if it relies on your specific expertise

Before you register as a sole trader

Before you start the registration process, you'll need to confirm sole trader is the right structure, gather your IRD number and business details, and understand your ongoing tax and compliance obligations.

Check if sole trader is right for your situation

Sole trader structure means you and the business are legally the same. You're personally responsible for any business debts, and creditors can pursue your personal assets if the business fails.

If you want more protection for your personal assets, consider setting up a company instead. A company creates a separate legal entity from you.

Gather required information and documents

To register, gather these details:

• IRD number: Have your Inland Revenue number ready, or apply for one first if you need one
• Business activity: Know your industry or type of work, which determines your ACC levy rate

Understand your ongoing obligations

Registering is just the first step. As a sole trader, you'll have ongoing responsibilities:

• Tax management: File your own income tax returns and pay provisional tax if required, which generally applies if your tax bill was more than $5,000 at the end of the previous year
• ACC levies: Pay annual levies based on your earnings and industry risk
• Record keeping: Track all income and expenses from day one

Understanding these duties early helps you manage your finances and stay calm at tax time.

How to register as a sole trader

Registering as a sole trader in New Zealand is free and establishes your legal business status with government agencies. The process involves three steps:

Inland Revenue (IR) tasks

Most sole trader registration tasks happen through Inland Revenue (IR). When you notify IR, they automatically share your details with ACC to set up your accident cover.

IRD number

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

• Have an IRD number: Notify Inland Revenue through myIR that you're now operating as a sole trader
• Need an IRD number:Apply through Inland Revenue before proceeding with registration

Register for GST

GST registration is mandatory if your business turnover was at least $60,000 in the last 12 months, or you expect to reach that threshold within the next 12 months. Register on time to avoid penalties.

Voluntary registration: If you earn under $60,000, you can still register to claim back GST on business expenses. This can be worthwhile if you have significant start-up costs.

Once registered, use IR's myIR service to manage and pay GST online.

Read more about goods and services tax (GST)

ACC levies

ACC coverage is automatic for sole traders through the CoverPlus programme. You receive weekly compensation if an accident prevents you from working.

ACC coverage works like this:

• Automatic set-up: Inland Revenue shares your details with ACC when you register
• Levy calculation: Based on your industry risk level and annual earnings
• Payment schedule: First invoice arrives after you file your tax return, then annually in July or August

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

Register as an employer

If you plan to hire employees, you'll need to complete additional registration steps.

Register as an employer with Inland Revenue if you hire staff. Read more about registering as an employer.

Inland Revenue will also ask about additional tax registrations:

• Fringe benefit tax (FBT): Required if you provide employees with certain benefits like company vehicles
• Employer superannuation contribution tax (ESCT): Deducted from KiwiSaver contributions you make for employees

Licences and permits

Some businesses need licences or permits from central or local government to operate legally. Common examples include:

• Food licence: Required to run a food business
• Alcohol licence: Required to sell alcohol
• Building consent: Required for certain construction work

Check the Compliance Matters website or your local council for requirements specific to your industry.

Professional qualifications or registrations

Some professions require qualifications or registrations before you can operate. Examples include:

• Electricians: Register and get licensed with the Electrical Workers Registration Board (EWRB)
• Physiotherapists: Hold a current annual practising certificate from the Physiotherapy Board
• Plumbers and gasfitters: Register with the Plumbers, Gasfitters and Drainlayers Board

Check with your industry body for specific requirements.

Business name

As a sole trader, you can trade under your own name or choose a business name. Using a business name doesn't create a separate legal entity, but it can help you build a distinct brand.

If you choose a business name, you can register it through the Companies Office to protect it from use by other businesses. This is optional but recommended if you want to establish brand recognition.

FAQs on registering as a sole trader

Here are answers to common questions about registering as a sole trader in New Zealand.

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

No, you can trade under your own name without registering a business name. However, if you want to use a different name for your business, you can register it through the Companies Office for added protection.

How long does it take to register as a sole trader?

Registration is immediate once you notify Inland Revenue through myIR. ACC coverage starts automatically, and you'll receive your first levy invoice after filing your tax return.

Can I change from sole trader to a company later?

Yes, many sole traders transition to a company structure as their business grows. You'll need to register a new company, transfer assets, and close your sole trader tax account with Inland Revenue.

Do I need business insurance as a sole trader?

While ACC provides accident coverage, you may want additional insurance for professional indemnity, public liability, or business assets. Insurance requirements vary by industry and aren't legally required for all sole traders.

What's the difference between a sole trader and a company?

A sole trader and the business are legally the same, meaning you're personally liable for all debts. A company is a separate legal entity, which protects your personal assets from business debts but involves higher set-up and compliance costs.