- Sole Trader
A sole trader is a person who:
- Goes into business and trades on their own.
- Is personally responsible for all taxes and debts.
- Uses their own IRD number for the business.
- Can trade under a trade name, employ staff and register for GST. It's important before you register for GST or as an employer that you seek advice from us, an accountant or a tax advisor about whether or not you need to register. There may be financial implications if you need to de-register at a future date.
If you became a sole trader, you need to let us know so we can update your records.
Further information about sole traders is available at:
A partnership is where two or more people join together to run a business and the following criteria apply:
- Partnerships need to apply for a new partnership IRD number.
- Profits and/or losses are usually shared equally between partners unless a partnership agreement states otherwise.
- Each partner is personally responsible for any partnership debt.
- They can trade under a trade name, employ staff and register for GST. It's important before a partnership registers for GST or as an employer that they seek advice from us, an accountant or a tax advisor about whether or not they need to register. There may be financial implications if they need to de-register at a future date.
Information about partnerships is available at:
- A company is a legal entity, separate from the shareholders that own the company.
- A company will need to apply for a company name and for its own IRD number.
- The shareholders liability for losses is limited to the amount of their shareholding in the company.
- A company has a greater number of compliance responsibilities than a sole trader or partnership. Companies not only have compliance responsibilities with Inland Revenue, but also the Companies Office.
- A company can apply for an IRD number, register as an employer and register for GST when they incorporate through the Companies office website.
It's important before a company registers for GST or as an employer that they seek advice from us, an accountant or a tax advisor about whether or not they need to register. There may be financial implications if they need to de-register at a future date.
More information about companies can be found at:
- Look-through companies (LTC)
- Are registered companies with the obligations and benefits of ordinary companies.
- Their owners need to elect for their company to be an LTC.
- Profits (or losses) in an LTC are "looked through" for income tax, meaning the owners are treated as having received the income and incurred the loss of the company.
- For income tax purposes, assets are considered to be owned by the shareholders.