Company vs Sole Trader in New Zealand
Comprehensive comparison to help you choose the right business structure for your NZ business in 2026.
| Feature | Sole Trader | Company |
|---|---|---|
| Tax Rate | 10.5% - 39% (personal tax rates) | 28% flat rate |
| Liability | Unlimited personal liability | Limited liability protection |
| Setup Cost | $0 - $50 (very low) | $150 - $500 (Companies Office registration) |
| Annual Compliance | Income tax return only | Annual return, financial statements, tax return |
| Admin Burden | Low | Medium-High |
| Raising Capital | Difficult (personal loans only) | Easier (can issue shares) |
| Business Name | Trade under your own name or registered business name | Protected company name |
| Perceived Credibility | Lower (individual trading) | Higher (incorporated entity) |
| Tax Planning | Limited options | More flexibility (salary vs dividends) |
| Losses | Offset against other personal income | Carried forward within company |
Sole Trader Tax Example
Business profit: $100,000
Tax (33% rate): $27,470
ACC levy: $1,390
After-tax income: $71,140
Company Tax Example
Company profit: $100,000
Company tax (28%): $28,000
After-tax profit: $72,000
*Plus flexibility in distribution
Choose Sole Trader If:
- ✓ You're just starting out and testing the business idea
- ✓ Your income is under $70,000 per year
- ✓ You want minimal paperwork and admin
- ✓ You have no employees or contractors
- ✓ Your business has low risk (e.g., consulting, freelancing)
Choose Company If:
- ✓ Your income exceeds $70,000 per year
- ✓ You want limited liability protection
- ✓ You plan to hire employees
- ✓ You need to raise capital or bring in investors
- ✓ Your business has higher risk or liability exposure
Not Sure Which Structure is Right for You?
Our tax accountants can analyze your situation and recommend the best structure for your business.