New Zealand Government regulations for business seek to regulate different aspects of doing business, broadly with the objectives of community welfare, environmental protection and raising revenues. Employment, Workplace safety, Sustainable development and Taxation are some of the important matters covered by New Zealand government regulations for business.
Licenses and Permissions
You would most likely need a business license from your local council. Additionally, New Zealand government regulations for business might require you to obtain other licenses specific to your industry. Particularly if handling of hazardous materials or other risks to community are involved.
Considering the non-uniform nature of licensing regulations, it is best that you consult your local council and industry association to find out what licenses you need.
Formation of a Business
New Zealand government regulations for business allow you to operate as a Sole Trader, Partnership, or Company. Other structures like charitable trusts are usually for non-profit organisations.
The Sole Trader form is the simplest. Generally, you don’t have to comply with complex formalities. You control the business and take all the profits. You would also pay all the taxes, and be personally responsible for all business debts.
Often, you might prefer to operate in Partnership with others. They might bring in much needed capital, skills or contacts. All partners could take active part in managing the business, and the profits are shared in an agreed manner. In case of insolvency, you might be held responsible for business debts incurred by some other partner.
The sole trader and partnership forms suffer from unlimited liability. That is, in case of insolvency, even your personal property could be attached for business debts. The Company form eliminates this risk. In a company, you are responsible only to the extent of any unpaid amount on the shares you have agreed to take up.
Companies are separate entities from shareholders. It can hold assets and incur liabilities in its own name. Capital is raised by issuing shares to those who have agreed to take shares. Companies must be registered with Companies Office, by filing certain documents and paying relevant fees.
New Zealand Taxation
Tax laws constitute the revenue-generating component of New Zealand government regulations for business. You pay tax on your business profits and sales.
Tax laws impose a liability not only to pay taxes but also to keep accurate and complete records of your business transactions so that your tax liabilities could be computed correctly. Additionally, you have to submit periodical returns to tax authorities. Finally, you have to deduct taxes from salaries and certain other payments you make, and pay over the deductions to tax authorities.
Failure to comply with these regulations could result in serious trouble for you. These troubles could distract you from your business, and cause losses greater than what you might save in taxes.
Sole traders and partners pay taxes as individuals. Companies pay taxes as an entity separate from its shareholders. Taxes are paid on net profits. Net profits are computed by deducting the expenses of doing a business from the income you earn from that business. Personal expenses, and expenses for acquiring or improving long term assets, are not allowed to be deducted thus.
The Inland Revenue Department – IRD – is the New Zealand government department responsible. You could find a great deal of helpful information at their IRD Web site. In particular, you would find how to obtain an IRD number that is needed for running a business.
All businesses need an IRD number, which is obtained by completing a form and submitting it to the IRD along with required documentation. Companies and partnerships need the non-individual IRD number while sole proprietors and partners need individual IRD numbers.
Goods and Services Tax – GST – is a tax that your customers pay. You have to collect it from your customer and pay it over to government. You must register for GST before collecting it from customers. However, if your sales turnover during a twelve month period is not likely to exceed $40,000, you need not register and collect GST.
There are some advantages of registering for GST even if your turnover is below the limit. See IRD’s GST Web page for details of GST.
If you employ workers, you must register as an employer with IRD. Thereafter you must make PAYE deductions from employee wages and pay it over to IRD. Additionally, you must contribute to Accident Compensation Corporation – ACC – fund, and deduct a contribution from employee and pay that also to ACC. Any fringe benefits you give to employees are subject to Fringe Benefit Tax.
Health and Safety Regulations
Health and Safety in Employment Act 1992 specifies New Zealand government regulations relating to workplace safety. The employer is primarily responsible for taking all practicable steps to ensure that the workplace is safe not only for the workers but also for those in the proximity.
The first step in the process of ensuring safety is identifying the hazards. The workplace and equipments should be physically inspected and the work processes analysed for this purpose. Other sources of hazards information are the history of past incidents, manuals of equipment suppliers and industry publications.
Once the hazards are identified, you have to do one of three things:
- Eliminate the hazard, by changing things, if possible;
- Isolate the likely source of hazard, so that workers do not come in contact; or
- Minimiise the likelihood of hazard, by, say, providing protective clothing and training in safe working practices to workers, in case isolation is also not practicable.
Provision of protective clothing and safety information to your employees is a statutory obligation of employers. Competent supervisory arrangements should also be put in place. Workers should also be involved in safety policies.
More specific information is available at Occupational Safety & Health – OSH – Web site. Also visit Accident Compensation Corporation Web site for information on accident compensation, prevention of injuries, and other information.
Fair Trading Laws
New Zealand government regulations for business include two major pieces of legislation to ensure consumer protection.
Fair Trading Act 1986 seeks to eliminate unfair trade practices, such as
- false claims in ads and promotions,
- incomplete and deceptive disclosures,
- misleading product comparisons,
- offering used or shop-soiled products as new,
- making deceptively low estimates while quoting, and
- other practices designed to deceive prospective customers.
Consumer Guarantees Act 1993 incorporates certain statutory guarantees into evey sale. These guarantees cannot be contracted out by overriding guarantees that come with the product. These implied guarantees seek to ensure that the goods sold must be fit for its intended use, safe and reasonably durable. The goods must also match any descriptions in catalogue, and where applicable, parts and service must be available for a reasonable time.
Main New Zealand government regulations for business on matters environmental is the Resource Management Act 1991. If your business would involve dealing with a subdivision or coastal use, or with discharges to air or land, or with water use, you might need resource consent from the regional council having jurisdiction in that area.
You have to apply for the consent, and the people affected by your resource use have a right to make submissions.
Visit the Ministry for the Environment Web site for specific details.
Government Regulations on Employment
Employment is more a human relations matter than just an economic contract. That is the view adopted in New Zealand government regulations for business relating to employment. Another central concept is good faith. Employers, employees and unions are expected to act in good faith.
Employers are in a better bargaining position and this fact is considered by the Act, which confers certain specific rights to employees. For example, they must be paid a minimum of $8.50 per hour and allowed three weeks as annual leave for a working year. They are also entitled to special leave for certain contingencies, including parenting.
There are also provisions relating to working hours, stress and fatigue, and other matters. The requirements of health and safety was discussed above. Discrimination on such grounds as sex, race or ethnic origin is prohibited. Any dismissals should be for good reason, and must be carried out in a fair manner.
The primary mechanism for dispute settlement is mediation, and judicial intervention is only a last resort remedy.
Visit New Zealand government regulations for business relating to employment for specific details.
Other New Zealand Government Regulations for Business
There are other business regulations including those for protection of intellectual property and individual privacy. Patents and Copyright laws specify the remedies if competitors copy the product, process, design or creative works that you had developed at considerable effort and cost. Privacy laws impose an obligation on businesses to use information they gather about individuals in a responsible and fair manner.
Business contracts require careful handling, as particular types of wording might cause you to lose valuable rights and remedies. It is best that you find a good lawyer whom you could approach for legal matters.
You could also log on to New Zealand government legislations Web site for a look at all the New Zealand government regulations for business, and other laws.