How To Start A Craft Business In New Zealand: Legal Requirements

Turning your creative skills into a real business is exciting - and it’s also one of those moments where getting the legal foundations right can save you a lot of stress later.

Whether you’re selling handmade candles, ceramics, jewellery, knitted goods, art prints, woodworking, or custom-made gifts, the legal basics for starting a craft business in New Zealand are pretty similar: pick the right structure, get your registrations sorted, put the right contracts in place, and make sure you’re complying with key laws around consumer rights, advertising, privacy, and (if you hire help) employment.

Below, we’ll walk through the essential legal steps to help you start strong and stay protected from day one.

What Counts As A “Craft Business” (And Why That Matters Legally)

A craft business is usually a product-based business where you create, assemble, customise, or design physical (and sometimes digital) items. That might include:

• Handmade products sold at markets, pop-ups, and retail stores
• Online orders shipped around New Zealand (or overseas)
• Custom commissions (eg, made-to-order wedding items)
• Workshops and classes (eg, “learn to weave” or “pottery nights”)
• Digital craft products (eg, patterns or templates)

Why does the category matter? Because different revenue streams come with different legal risks and compliance needs.

For example:

• If you sell physical goods to consumers, you’ll need to understand the Consumer Guarantees Act 1993 and Fair Trading Act 1986 (consumer rights, product quality, and advertising claims).
• If you collect customer addresses and emails for orders and marketing, the Privacy Act 2020 is relevant (and you’ll likely need a Privacy Policy).
• If you collaborate with a stockist, supplier, or another maker, you’ll want clear written agreements to avoid disputes over pricing, timing, and ownership of designs.

Once you’re clear on what you’re selling and how you’re selling it, you can set up the legal side to match.

Choosing Your Business Structure Before You Start Selling

One of the first legal decisions when starting a craft business in New Zealand is your business structure. This affects your personal liability, tax setup, and how you can grow the business later (including bringing in a business partner or investor).

Sole Trader

This is the most common starting point for small craft businesses.

• Pros: simple and low-cost to set up, fewer admin requirements.
• Cons: you’re personally responsible for the business’s debts and liabilities.

If you’re testing demand (for example, selling at weekend markets while you build a customer base), sole trader can be a practical place to start - just be mindful that “simple” doesn’t mean “risk-free”.

Partnership

If you’re going into business with another person (for example, one person makes products and the other handles sales and marketing), a partnership might feel like the natural fit - but it’s also where disputes commonly arise if things aren’t written down properly.

A partnership should usually be backed by a tailored Partnership Agreement covering profit shares, decision-making, roles, what happens if someone wants to leave, and how disputes are handled.

Company

A limited liability company is often used when you want a more formal structure, or you’re scaling quickly (bigger inventory, staff, wholesale arrangements, larger contracts).

• Pros: the company is a separate legal entity (which can reduce personal risk in many situations), can look more established to suppliers and stockists.
• Cons: more admin and ongoing compliance, and you must keep company records in order.

If you set up a company, consider whether you need a Company Constitution to set internal rules, and if there are multiple founders, a Shareholders Agreement to manage decision-making and exit scenarios.

If you’re not sure which structure suits your craft business, it’s worth getting tailored advice early - changing structures later can be done, but it can also create cost, admin, and tax complexity.

What Registrations And Set-Up Steps Do I Need For A Craft Business?

When people search “start a craft business in New Zealand”, they’re often looking for a simple checklist of what needs to be registered. The right answer depends on how you operate, but here are the common steps.

1) IRD And Tax Setup

At a minimum, you’ll want to make sure you’re correctly set up with Inland Revenue for your business income.

• Income tax: business profit is generally taxable income (even if you’re selling “on the side”).
• GST: if your taxable supplies exceed the current GST registration threshold (NZD $60,000 in a 12-month period) - or you choose to register voluntarily - you’ll generally need to charge GST and file returns.

Tax can get complex quickly depending on your circumstances (for example, how you price products, track expenses, or sell overseas), so it’s a good idea to speak with an accountant or tax adviser to make sure you’re set up correctly. This article is general information only and isn’t tax advice.

2) Business Name Vs Trading Name

You don’t always need to “register” a trading name in New Zealand the way some countries require, but you do need to be careful about:

• not misleading customers about who you are (consumer law issues);
• not using a name that infringes another business’s rights (trade mark and branding risks); and
• ensuring your invoices, website, and checkout pages clearly identify the seller.

If you’re operating as a company, your registered company name is separate from the brand name you might use on your packaging and online store.

3) Domain Names And Social Handles

This isn’t a “legal registration” in the formal sense, but it’s a practical step that can prevent disputes. If you’re serious about your craft business, secure your domain name and key handles early so you’re not forced to rebrand later.

4) Local Council Rules (Markets, Home Studios, Signage)

Many craft businesses start from home, sell at markets, or use shared studio spaces. Depending on where and how you operate, you may need to check:

• whether your local council has rules around home-based businesses (parking, signage, customer visits);
• market organiser rules (they often require you to have public liability insurance);
• any health and safety requirements for workshop events (especially if the public attends).

This is one of those areas where it’s better to check first rather than get told to stop trading later.

Contracts You Should Have In Place (Even If You’re Just Starting Out)

Craft businesses run on relationships: customers, suppliers, couriers, stockists, market organisers, collaborators, and sometimes friends or family who help out.

The right contracts make expectations clear and help you enforce payment terms, delivery timeframes, quality standards, cancellation rules, and IP ownership.

Customer Terms And Online Store Terms

If you sell online, you should have clear website terms (and the checkout process should be consistent with them). Your terms often cover:

• order processing and dispatch timeframes
• delivery and risk (eg, what happens if a parcel is lost)
• returns, refunds, and exchanges (aligned with the Consumer Guarantees Act)
• pre-orders and made-to-order timelines
• custom order rules (eg, what happens if a customer changes their mind)
• limitations of liability where appropriate

Having properly drafted Business Terms helps you look professional and reduces the “but I thought…” disputes that can drain your time.

Supplier Or Manufacturer Agreements

Even handmade brands often rely on suppliers (packaging, raw materials, printed labels, components) or a third party manufacturer for some product lines.

A written agreement can deal with:

• minimum orders, lead times, and delivery expectations
• quality control and what happens if goods are defective
• pricing changes and payment terms
• ownership of designs, moulds, templates, or artwork
• confidentiality (so your designs aren’t shared or reused)

This is especially important if your craft business has signature designs or you’re developing new products that give you an edge.

Stockist Or Wholesale Agreements

If you sell through retail stores (stockists), you’ll want clarity on the commercial arrangement. Are they buying wholesale and reselling? Or are they selling on consignment (only paying you after an item sells)?

These agreements should clearly cover:

• pricing, margins, and payment dates
• who covers shipping and insurance
• what happens to unsold stock
• how damaged items are handled
• exclusivity (if any) by region or product line

Where the arrangement is “sell first, pay later”, a Consignment Agreement structure may be appropriate.

Collaboration Agreements (And Avoiding IP Confusion)

Collaborations are common in the craft space - for example, two makers releasing a joint collection or bundling products for gift boxes.

Before you promote anything, make sure you’ve agreed (in writing):

• who owns what intellectual property (designs, photos, branding, packaging)
• who can use content for marketing after the collab ends
• who pays for materials and advertising
• how revenue is split and when payments happen

A simple written agreement now is much easier than trying to untangle it later when your collaboration goes viral and money is on the table.

Hiring Help: Employees Vs Contractors

At some point, you might get help with packing orders, making products, running workshops, or managing social media. It’s important to correctly classify the relationship:

• Employees are covered by employment law obligations (minimum entitlements, good faith, payroll, leave, etc.).
• Contractors run their own business and are engaged under a commercial contract (but you still need to structure it properly to avoid misclassification risk).

If you hire employees, you’ll want an Employment Contract in place from day one, and ideally clear workplace policies too.

Legal Compliance: Consumer Law, Advertising, Privacy, And Product Safety

Once you’re trading, compliance isn’t optional - but it also doesn’t need to be overwhelming. If you focus on the main legal areas that apply to most craft businesses, you’ll be in a strong position.

Consumer Guarantees Act 1993 (CGA)

If you sell goods to consumers in New Zealand, the CGA generally requires your products to be:

• of acceptable quality
• fit for purpose
• matching their description

This matters for craft businesses because customers often buy based on photos and descriptions. If a product arrives significantly different, or it’s faulty, you may need to provide a remedy. Depending on whether the issue is minor or substantial, that remedy may include repair, replacement, or refund.

Be careful with “no refunds” signs - they can be unlawful or misleading in many consumer contexts.

Fair Trading Act 1986 (FTA)

The Fair Trading Act is about truthful conduct in trade. It prohibits misleading or deceptive conduct and false representations.

For craft businesses, common risk areas include:

• marketing something as “handmade” or “New Zealand made” when part of the process is outsourced
• claiming materials are “solid gold”, “sterling silver”, “eco-friendly”, “non-toxic”, or “hypoallergenic” without being sure
• advertising a discount that isn’t genuine (eg, inflating the “was” price)
• using product photos that don’t accurately reflect the item (lighting and filters can cause issues)

A good rule of thumb: if you’re making a claim that could influence someone’s decision to buy, make sure you can back it up.

Privacy Act 2020 (Customer Data)

If you collect personal information (names, emails, phone numbers, delivery addresses), you need to handle it responsibly. That usually means:

• only collecting what you need
• storing it securely
• only using it for the purpose you collected it for (unless you’ve got consent for additional uses)
• being transparent about your practices

Having a clear Privacy Policy is a common and practical step, especially if you sell online or do email marketing.

Product Safety And Labelling (Practical Compliance)

Craft products can still cause harm if they’re not designed and labelled properly - especially items used by children, products that touch skin, or items involving heat/flame.

Depending on what you sell, think about:

• clear instructions and warnings (eg, candle safety)
• allergen or ingredient disclosure where relevant
• age-appropriateness and choking hazards
• safe packaging for shipping
• whether there are product safety standards, mandatory warnings, or specific labelling rules that apply to your product category

If you’re unsure whether your product needs specific warnings or compliance steps, it’s worth getting advice. Fixing labelling after a complaint (or an injury) is usually far more expensive than doing it right upfront.

Protecting Your Brand And Designs (So You Don’t Have To Rebuild Later)

When you start a craft business in New Zealand, your brand is often one of your most valuable assets - your name, logo, product designs, packaging, and the “look and feel” you become known for.

There are a few practical protection steps to consider:

Trade Marks

If you want stronger rights over your business name, logo, or key product line names, trade mark protection is worth considering. This can be particularly important if:

• you’re investing in packaging and marketing
• you’re building an online following
• you’re approaching stockists or expanding nationally

A trade mark can help you stop others from using an identical or confusingly similar brand in the same (or similar) categories.

Copyright (Designs, Photos, Patterns, Content)

Copyright can protect original creative works like artwork, illustrations, product photos, written patterns, and website copy. But ownership can get tricky when:

• a freelancer takes your photos or designs your logo
• you collaborate with another creator
• you outsource design work for packaging or product instructions

This is where a written contract is your friend - it can clarify who owns what, and what rights each person has to use the work.

Confidentiality And Copycats

If you’re sharing new designs with suppliers, collaborators, or contractors before launch, consider putting confidentiality obligations in place. It won’t stop every copycat, but it can significantly improve your position if a dispute arises.

Protecting IP can feel “too formal” when you’re in the early days - but imagine this: one of your products takes off on social media, then a competitor launches a near-identical version using your name or design style. Fixing it after the fact is much harder than setting up protections early.

Key Takeaways

• When you start a craft business in New Zealand, your first legal step should be choosing the right business structure (sole trader, partnership, or company) based on risk, growth plans, and who’s involved.
• Registrations and set-up steps often include getting your IRD and tax position sorted, thinking carefully about your trading name, and checking any local council requirements if you’re operating from home or running workshops.
• Strong contracts are a major part of being protected from day one, including customer terms, supplier agreements, wholesale/stockist arrangements, and collaboration agreements.
• Most craft businesses need to comply with the Consumer Guarantees Act 1993 and Fair Trading Act 1986, especially around product quality, remedies, and making accurate advertising claims.
• If you collect customer information (like delivery addresses and emails), you should comply with the Privacy Act 2020 and have a clear Privacy Policy in place.
• Brand protection matters as you grow - trade marks and clear IP ownership clauses can help protect your business name, designs, and creative assets.

If you’d like help setting up your craft business properly - whether that’s choosing a structure, drafting your Business Terms, or getting the right contracts in place - reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.