Top 5 Benefits Of Working Under A NZBN

If you are running a business, you are more than likely to apply for and receive a New Zealand Business Number (NZBN) as a business operating in New Zealand.

Having a NZBN is highly beneficial to your business and it is easy to get one! This article will cover the pros of having an ABN. It will also discuss how to register for an ABN and the legal obligations you have under your ABN. 

However, before we get into the details of why an ABN is useful, let’s go through the basics. 

What Is A NZBN?

A New Zealand Business Number (NZBN) identifies your business with a unique number. The government, other businesses and the public are able to differentiate your business from other businesses easily when you have a NZBN. 

It also makes it easier for people to work and interact with your business. For example, suppliers who have access to your NZBN can easily see key details about your business which can help things run smoothly.

Do I Need A NZBN?

If you’re a Kiwi business, you’re eligible to apply for a NZBN. Whether you’re a sole trader or a large corporation, you can have a NZBN to make business activities a lot easier for you.

Can Anyone Have A NZBN?

If you run a business in New Zealand, you need a NZBN. If you do not run a business, then you will not need one. 

If you are providing services to an employer as a contractor (under a Contractor Agreement), you will need to apply for a NZBN. 

Can You Have More Than One NZBN?

Technically, you can run multiple businesses under the same NZBN if they are all under the same business structure. 

If the structures for your individual businesses are different, you’ll need a new NZBN for each of them. 

Why Should I Get An ABN? 

If you’re entitled to get a NZBN, under the criteria mentioned above, you must get one to avoid serious legal consequences. But even if it was not mandatory, it would be within your best interests as a business to have a NZBN. Below, the five main benefits of a NZBN are highlighted and explained. 

1. Become Easily Identifiable 

When operating as a business there are many circumstances where you do not want a case of mistaken identity. For example, say you are getting paid by a business partner. While your business name is definitely helpful, there are lots of businesses out there and some have very similar names. The benefits of a unique identification mechanism are self-evident in this regard. 

Once you have your NZBN, you can also register your business name nationally. Like the NZBN, this is mandatory if you are conducting business under any name other than your own. However, registering your business name also makes that business name unavailable to other businesses. Further helping you to identify your business and stand out. 

2. Tax Credits

Any purchases that you make in the course of running your business are tax deductible. In order to file for these tax deductions you must quote your NZBN. Without one you cannot claim tax deductions as a business. The purchases that you make in the course of setting up and running a business can be substantial, this can mean significant reductions in the amount that you are taxed each year. 

3. Domain Name 

When you set up a website you need to register an available domain name. As a business starting up you will more than likely have a website. This is because having an online presence is essential to running a modern business. 

In order to compete as a small business your customers need to have easy access to information about your business or online sales options you may be offering. 

To register and reserve a website name as a business, you’ll need a NZBN.

These endings are likely to make your website look more legitimate and trustworthy. Although it may seem minor, this is a major benefit!

In Summary

The benefits of a NZBN are:

• easy identification
• various tax and scheme benefits 
• ability to reserve a domain name 

These benefits are all great ways to get a head start for a business starting up where identification and money saving measures are essential. 

To make it more appealing, there are almost no identifiable downsides to having a NZBN. It does carry a few extra obligations but you incur these when you run a business anyway. These obligations are explored below. 

How Do I Get A NZBN? 

If the above benefits have stirred your interest in getting a NZBN, we have the answers on HOW you can get one right here. Registering for a NZBN is free and once you have the relevant information it’s pretty easy. 

Firstly, you have to make sure that you are eligible for a NZBN. You are eligible for an ABN if you are running or starting a business. To determine if you are running a business there are a series of factors that will be considered.

In short, the process of determining if you are running or starting a business involves proving that you are doing business-like operations i.e. making a profit, advertising, seeking work or clients etc.  

Second, you need to determine your business structure. This is a choice based on your specific business and circumstance. You must nominate if you are a:

• Sole trader
• Partnership
• Company 

Once you have identified your business structure, you just need your proof of identity and details of your business and associates before you are ready.

How Do I Find A NZBN?

If you would like to find a NZBN online, use the NZBN Register. This is a register with all registered NZBNs in New Zealand. 

This is a crucial step if you’re engaging with a business and you want to complete your due diligence and ensure you are making informed commercial decisions. 

What Are My Obligations Under An ABN? 

The obligations under an NZBN are mostly regarding tax. If you are a business operating under a NZBN you will be required to lodge an annual tax return regardless of your earnings. 

Additionally, if you are operating or paying another business without a NZBN you will have to withhold some of the pay and reserve it for Inland Revenue. 

Want The Benefits But Still Unsure About ABNs? 

Running a business involves lots of different considerations and questions to ask. If you need help with any legal aspects of your business, our lawyers can answer your questions.

If you would like a consultation on your options moving forward, you can reach us at 0800 002 184 or [email protected] for a free, no-obligations chat.

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