Guide on starting a small business from home in NZ

Not everyone has the capital to open a brick-and-mortar store. Starting a small business from home in New Zealand offers an affordable alternative, with lower costs and enticing home office tax benefits. Plus, you get a flexible work schedule and can be your own boss.

Whether you’re a sole trader or starting a small home-based company, you must comply with taxation, legal, and council obligations.

This post will cover all this and more, so the aspiring entrepreneur can kickstart a home business. We’ll also introduce Wise Business, a cost-saving money transfer solution that can help small businesses reconcile and manage business finances efficiently.

Table of contents
Steps to starting a small business from home in NZ Different business ideas you can start from home Conclusion FAQs

Sign up for the Wise Business account! 🚀

Steps to starting a small business from home in NZ

Develop a business plan

Even the tiniest home businesses should develop a business plan to define their offering, processes, and objectives. Clarify what you’re selling and how to stand out in a crowded market. Next, consider where to sell your product or service–from your home, deliveries, or a local weekend market. A small home business doesn’t need a long, comprehensive document. But having a concrete plan can help visualize areas where focus is required and potentially avoid redundant efforts.

👆Unsure where or how to start? Check out our FREE business plan template!

Perform market research

Although daunting, market research helps you understand who might buy your product and why. As a home business lacks the resources to outsource market research, you must do some solo sleuthing.

Evaluate demand in your area, the size of your potential customer base, and how your product will meet their needs. Google Maps and Google Search will reveal similar home businesses and brick-and-mortar shopfronts near you.

Visit competitors in person to see what they’re doing well — and what they’re not. Look at demand, pricing, marketing, and customer service to identify strengths and weaknesses.

Private companies can keep their finances quiet, but publicly traded companies must legally publish annual reports.¹ Look at their website’s investors page. Statistics New Zealand and trade organisations also publish free data on specific industries.

Choose a business structure

A New Zealand home business owner can choose one of three structures: sole trader, partnership, or company. Each must pay tax and can hire staff and export products.² However, tax obligations and employment conditions vary considerably, and switching structures can be a pain. Take time to mull over the decision.

The sole trader structure generally works best when you do most of the work. A partnership might suit when starting a joint venture. Entrepreneurs seeking investors or planning to scale may benefit from a company structure.

Registering your home business in New Zealand

Sole traders need only inform IRD of their intentions and obtain an IRD number for filing taxes, if they don’t already have one. No other registration requirements apply.³

But if you’re starting a limited partnership, you’ll need to hop through a host of hurdles:

• Registering a business name with 'L.P.' at the end.
• Providing a physical office and service address, a postal address (PO Box acceptable) and an email address.
• Providing a certified partnership agreement
• Ensuring that at least one partner lives in New Zealand
• Signing partnership consent forms
• Providing personal information on general and limited partners
• Obtaining a New Zealand Business Number (NZBN)
• Creating and linking a RealMe account
• Completing the online application form
• Paying the registration fee⁴

Home-based businesses with a company structure must tear through more red tape. Extra steps include registering directors, registering shares and shareholders, declaring an ultimate holding company (UHC), filing annual returns, creating a company constitution, and filing director and shareholder consent forms.⁵

Choosing a business name

Even if you’re selling brownies on Facebook Marketplace, a business name enhances legitimacy–it tells customers you mean business.

Think of something relevant that resonates with your target demographic and reflects your brand. A catchy pun could suit a fun, casual company, while customers using formal services prefer traditional names.

Devise a marketing plan

Marketing is half the battle when running a business from home. With limited advertising resources, you’ll do most of the legwork alone.

Open new Facebook and Instagram accounts, then ask your network to follow and share. Entrepreneurs selling business-to-business (B2B) services should invest more time on LinkedIn. Brands with strong visual content can consider Pinterest, while TikTok is useful for reaching younger audiences. On every channel, post regular content and engage with your followers.

Planning to trade in your neighbourhood? The old-fashioned leaflet-in-the-letterbox approach can yield decent results. Network at local events like school fêtes, barbeques, council meetings, or religious gatherings; but don’t be pushy. Kiwis love supporting locals, so let everyone know you live nearby.

Build a basic website using a pre-existing template and register a relevant domain. Search Engine Optimisation (SEO) techniques can help customers find you on Google if the keywords aren’t too competitive. Add your business to Google Maps and include your contact details and webpage. Ask happy customers to leave a positive review.

Complying with tax obligations

Only two things are certain: death and taxes. No matter what type of home business you run, expect to give IRD a cut.

The good news is you can claim some of your living costs as home office expenses to reduce your taxable income. Examples include telephone and internet bills, utilities like electricity and water, and even mortgage interest, rates and rent. The IRD offers a square metre option to calculate deductions based on the portion of your home used for business activities.⁶

You’ll need receipts of business expenses to claim deductions. Regardless of your business structure, you must register for GST if you expect to turnover more than $60,000 annually.⁷

Of course, comprehending complex tax regulations is tricky for the typical, non-numerically-gifted business owner. Consider enlisting a qualified accountant come tax time. In addition, there are tons of accounting solutions in the market that can help reconcile your financial transactions by linking with business accounts. This way, data gets synced automatically which can be used for tax filing and reporting purposes. It is best to consult with an expert on what type of approach would suit your business.

Complying with legal obligations

Running a small home business doesn’t mean you can operate outside the law. Depending on your circumstances, you may be required to provide various legal agreements, such as a:

• Privacy policy
• Terms and conditions
• Supply agreement
• Service agreement
• Copyright disclaimer

You may also need a license to operate in your industry. For example, many healthcare professionals, tradespeople, and white-collar professionals like lawyers, teachers, and engineers need qualifications to trade legally, even for a small home business.

Should you employ staff, you must abide by New Zealand Employment Legislation. Consider protections like minimum wages, parental leave, equal pay, and holidays. ⁸

Complying with Council regulations

Your local Council will also have its own ordinances to consider, especially when a home business affects the culture, heritage, or quality of life of its residents.

• Zoning rules may prohibit your business from operating in the area
• Home businesses with regular visitors might have to install signage or modify carparks
• You may need Council permission to extend your home for business purposes
• Noise restrictions may prevent you from operating at certain times

Every Council has different rules. Most offer free consultations to future home business owners in person or over the phone.

Opening a business account in New Zealand

A business account keeps personal and commercial transactions separate, saving a massive headache come tax time. It also projects a professional image and streamlines bookkeeping through accounting software integration and automating reconciliations. Most New Zealand banks offer business accounts with distinct pros and cons.

Wise Business – an alternative

For aspiring entrepreneurs navigating the complexities of international commerce, managing finances across borders can be a significant hurdle. From offering multi-currency accounts and competitive exchange rates to facilitating batch payments and integrating with accounting software, Wise Business aims to streamline your financial operations and help your venture thrive in the global marketplace.

A Wise Business account allows users to can send, receive, and hold in multiple currencies. Experience hassle-free global transactions by transacting like a local business. Here's what you get with a Wise Business account:

• Free to register — Hold and convert between 40+ currencies. Send to 140+ countries
• Debit cards for you and your team, which you can use in 150+ countries
• Multi-user access for team members, with ways to control and manage permissions
• Pay up to 1,000 recipients at once with the Wise batch payments feature
• Integrate with your favourite cloud accounting solutions like Xero, QuickBooks, and more
• Get account details to receive in 8+ currencies for a one-time fee of 40 NZD

Sign up for the Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

Different business ideas you can start from home

Need inspiration? Here are some business ideas you could operate from the comfort of home.

Work-from-home online jobs

• Writing, editing, proofreading, or translating
• Online tutoring
• Virtual assistant
• Social media management
• Consulting
• Web design and development
• Software engineering

In-person services you could provide from home

• Personal training
• Massage
• Physiotherapy
• Pet sitting, dog walking, or dog grooming
• In-person tutoring
• Professional organising
• Car detailing or washing
• Food preparation and catering

Starting a business from home comes with pros and cons - Be ready!

Starting a business from home gives you freedom, flexibility, tax benefits, and lower operational/start-up costs. But you must still comply with legal, taxation, and Council obligations.

Ensure you have a solid business plan and a suitable structure, then do some market research and devise a marketing strategy.

We wish you the best on your exciting new business venture.

---

FAQs

Is it illegal to run a business from home?

Running a business from home may be legal, depending on the industry, zoning laws, and business type. You will still need to abide by all regulatory obligations.

Can I run a business from a rental property?

Check your rental agreement to see whether business activities are prohibited. If unclear, contact your landlord and get the agreement in writing.

---

Sources:

1. New Zealand Legislation - Companies ACT 1993
2. Business NZ - Choosing the right business structure
3. Business NZ - Becoming a sole trader
4. Companies Office - Registering a limited partnership
5. Companies Office - Starting a company
6. IRD - Using your home for your business
7. IRD - Registering for GST
8. Employment NZ - Employment legislation