Ultimate Business Owner’s Guide To Business Legislation

Understanding business legislation is crucial for operating within the legal framework of New Zealand. It can seem overwhelming, but we’re here to guide you through the essentials.

Starting a legally compliant business in New Zealand is akin to assembling a puzzle. Let’s piece it together.

We aim to provide you with the knowledge you need to ensure your business adheres to New Zealand law.

This article will delve into several key legislations pertinent to businesses in New Zealand.

1. Registering Your Business 

Here’s a brief overview of the key steps for registering a business in New Zealand.

You might need to register for:

1. A New Zealand Business Number (NZBN)
2. Goods and Services Tax (GST)
3. Inland Revenue Department (IRD) number
4. Pay As You Earn (PAYE) for employee tax

For details on registering a company, you can read more here.

New Zealand Business Number (NZBN) 

Most businesses in New Zealand will require a New Zealand Business Number (NZBN). It’s a unique identifier for your business and is used in transactions with other businesses and government agencies.

Do I Need An NZBN? 

You should consider applying for an NZBN if:

• you are starting or already running a business in New Zealand
• you wish to make your business dealings more efficient
• you are a sole trader, partnership, company, or trust

Having an NZBN can streamline many aspects of your business, such as invoicing and procurement.

What Does An NZBN Do For Me? 

An NZBN can simplify business processes by:

• Facilitating faster and more accurate interactions with other businesses and government
• Reducing the number of times you need to provide the same information to different agencies
• Improving the visibility of your business in the marketplace

How Do I Get One? 

To obtain an NZBN, visit the official NZBN website and ensure you have:

• Your chosen business structure details
• Proof of identity
• Information about your business activities and associates

Registering for an NZBN is free of charge.

Goods and Services Tax (GST)

What Is GST? 

GST is a tax applied to most goods and services in New Zealand. It is currently set at 15% and is collected by businesses on behalf of the government.

Do I Need To Register For GST? 

You are required to register for GST if:

• Your turnover exceeds NZ$60,000 per year
• You include GST in your prices
• You want to claim GST credits

If your turnover is below this threshold, GST registration is optional.

How Do I Register For GST? 

To register for GST, you must have an NZBN or IRD number. Visit the Inland Revenue website to register for GST.

Inland Revenue Department (IRD) Number 

An IRD number is a unique identifier issued by the Inland Revenue Department. It’s essential for all tax-related matters in New Zealand.

What Type Of IRD Number Do I Need? 

The type of IRD number you need depends on your business structure. Partnerships, companies, and trusts require a separate IRD number from your personal one. Sole traders can use their individual IRD number for business purposes.

How Do I Register For An IRD Number? 

Once you’ve determined the type of IRD number you need, visit the Inland Revenue website to register for an IRD number.

Pay As You Earn (PAYE) Withholding

In New Zealand, employers are required to deduct PAYE tax from their employees’ wages and pass it on to the Inland Revenue Department.

You must register for PAYE before you start paying employees. Registration can be completed through the Inland Revenue website.

What Obligations Do I Have Once I Have Registered? 

After registering for PAYE, you must:

• File employment information each payday instead of an Employer monthly schedule (IR348)
• Provide your employees with details of their pay and deductions
• Keep accurate records of all wages and deductions

2. Fair Trading Laws

Fair Trading laws in New Zealand are designed to ensure that businesses operate ethically and transparently, protecting consumers from misleading or deceptive conduct.

Before pricing, labelling products, offering secure card payments, or providing warranties and refunds, you must understand the Fair Trading Act 1986.

The Fair Trading Act 1986 

The Fair Trading Act 1986 sets the standards for business conduct in New Zealand, promoting fair competition and informed consumer choice. It covers:

• Prohibitions against misleading and deceptive conduct
• False representations
• Unsubstantiated claims
• Consumer information standards
• Product safety standards

Learn more about fair trading practices and consumer rights.

3. Contracts

Engaging in business often involves entering into contracts. It’s important to understand the terms and ensure they are enforceable under New Zealand law.

Contract law in New Zealand includes compliance with consumer protection laws and employment legislation, such as the Employment Relations Act 2000. Read more about unfair contract terms and employment contracts.

4. Data & Privacy Laws

With the increasing importance of personal data in business, New Zealand has implemented the Privacy Act 2020 to regulate the collection, use, and disclosure of personal information.

It’s advisable for businesses to have a privacy policy that complies with the Privacy Act 2020.

Do I Have Obligations Under the Privacy Act 2020? 

The Privacy Act 2020 applies to most businesses in New Zealand, regardless of size. It sets out 13 privacy principles that govern how personal information should be collected, used, stored, and disclosed.

If your business handles personal information, it’s essential to understand your obligations under the Privacy Act 2020. More information on privacy obligations can be found here.

Businesses operating internationally, such as in the EU, must also comply with international regulations like the General Data Protection Regulation (GDPR).

5. Employment Laws

Employers in New Zealand must adhere to employment laws outlined in the Employment Relations Act 2000. This section will touch on common obligations, anti-bullying laws, and unfair dismissal.

Common Obligations 

As an employer, you are required to:

• Pay employees according to the relevant industry award or, if none, the minimum wage
• Comply with Health and Safety at Work Act 2015 standards
• Maintain appropriate business insurance, including compulsory insurance like ACC for workplace injuries
• Meet any specific requirements for working with vulnerable people or children

Anti-Bullying, Harassment & Discrimination Laws

Bullying, harassment, and discrimination are prohibited in New Zealand workplaces. Employers must take steps to prevent such behaviour and provide a safe work environment.

For guidance on managing workplace bullying, harassment, and discrimination, visit this resource.

Unfair Dismissal

When terminating employment, ensure the reasons are valid to avoid claims of unfair dismissal. Valid reasons include poor performance, misconduct, or redundancy.

For more information on unfair dismissal and notice requirements, see this guide.

But Wait There’s More… 

The above summarises key business legislation in New Zealand. However, specific industries may have additional legal requirements.

These may include:

• Franchising regulations
• Intellectual property protection
• Importing and exporting regulations
• Food and beverage laws
• Packaging and labelling requirements

If you have any questions about your business’s legal obligations, please contact us at [email protected] or on 0800 002 184 for a free, no-obligations chat.

---