Should I run my business as a sole trader or a company?

General information from Lawmateanz

In New Zealand, a sole trader and the business are legally the same person, so you're personally responsible for all business debts. A company is a separate legal entity, so shareholders' liability is generally limited to what they've put in.

A sole trader is simpler and cheaper to set up and run. A company involves registration with the Companies Office, annual returns, and directors' duties, but it can make it easier to bring in partners or investors.

Limited liability has limits. Banks and landlords often ask directors for personal guarantees, and directors can be personally liable for breaching their duties, such as trading recklessly.

Tax is treated differently too, so it's worth talking to an accountant as well as a lawyer. Business.govt.nz has free guides on choosing a business structure.

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General information only. Answers are written by independent lawyers based only on what's in the question. They aren't legal advice about your situation and don't create a lawyer–client relationship. For advice about your own matter, talk to a lawyer directly.