BUSINESS LEGAL STRUCTURES
To determine the most suitable structure you will need to consider a number of factors such as:
|Which structure is right for the
type of business you intend to run (eg. some professions can only be sole
traders or partnerships)
||Whether the business is new or
already established - and a one-off project or on-going
||Internal structure - eg. the
number of people involved, the proportion of contributions
||Continuity - eg. when the
business is intended to be passed onto children
||Set up and ongoing costs
||How the structure will affect the
growth of the business and its ability to access finance, etc|
It is wise to talk to professionals, such as an accountant and a lawyer, for advice.
DECIDING ON A BUSINESS NAME
If you are not trading under your own name (ie. John Doe) you need to decide on a trade name for your business. Check what names are already being used and the availability of the name you are considering at the following locations:
|Companies Register (www.companies.govt.nz)
- for businesses registered as limited liability companies
||Trade Marks Register at the
Intellectual Properties Office (www.iponz.govt.nz)
- to make sure that the name you have chose does not breach anyone’s
||Telecom Yellow Pages (www.yellowpages.co.nz)
- for any existing sole traders or partnerships using a trading name
- to check that the Internet Domain Name is still available to use for your
PROTECTING A BUSINESS NAME
Although there is no provision in New Zealand to register a ‘business name’ you may wish to consider registering a:
|Company - this will ensure
no other companies will be registered with an identical company name.
||Trademark - this grants the owner
exclusive use of that trademark for a specified range of goods or services.|
This is a single person business. If
another person is involved then a partnership or company structure should be
considered. The sole trader has individual ownership of the business.
A partnership consists of a number
of individuals conduct their business together in order to make a profit. It is
often referred to as a firm. The minium number of individuals is 2 and the
maximum number allowed is 25. Partners have an equal share in the business,
unless stated otherwise in the partnership agreement. Where provision hasn’t
been made under the partnership agreement, the Partnerships Act 1908 applies.
Partnerships must file an annual tax return stating each partner’s share of
the income and partners are taxed personally on their share.
LIMITED LIABILITY COMPANY
A limited liability company is an
association of individuals recognised as a separate legal entity and registered
under the Companies Act 1993. The company is separate from its shareholders and
directors, therefore the shareholders have limited liability to the company.
Under the Companies Act the directors have certain defined duties, and the
company must have at least one share, one shareholder and one director. There
must be a physical address for the registered office.
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