Starting a company vs being a sole trader in NZ

Starting a business in New Zealand can be an exciting and rewarding experience. But it’s important to understand the differences between starting a company and being a sole trader before you decide which option is best for you.

One of the main advantages of starting a company is that it offers limited liability, meaning that the company’s owners are not personally liable for any debts or other liabilities incurred by the company. This can be a great benefit if the company fails, as the owners’ personal assets are protected. Another advantage of starting a company is that it can be easier to raise capital, as investors may be more willing to invest in a company than in a sole trader. Companies also tend to have more credibility than sole traders, as they have a more established presence in the marketplace.

On the other hand, being a sole trader has its own advantages. It’s much easier to set up than a company, and the paperwork is minimal. Sole traders also have more control over their business, as they are the only decision-maker. Additionally, sole traders have the potential to earn more money than companies, as they don’t have to pay company tax.

Ultimately, the decision of whether to start a company or be a sole trader will depend on your individual circumstances and goals. It’s important to consider the pros and cons of each option before making a decision. Doing your research and getting professional advice can help you make the best decision for your business.

For further information, see the Ministry of Business guide about choosing your business structure.

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