Sole trader or limited?

A growing proportion of businesses are limited-liability companies and fewer are sole proprietors, Statistics NZ stated recently.

A limited-liability company means personal taxes are separated from business taxes and personal assets are (typically) not at risk.

Of a total 528,170 enterprises, more than half (56 percent) were registered limited-liability companies at February 2017. Ten years ago (at February 2007), only 47 percent of businesses were limited-liability companies.

In contrast, individual proprietorships and partnerships, which are simpler forms of business, both accounted for a lower 28 percent of enterprises at February 2017. This was a significant 10-point drop from a 38 percent share these two business types together had 10 years ago.

More companies are choosing to operate under a corporate legal structure as opposed to non-corporate arrangements.

At February 2017, registered limited-liability companies employed 71 percent of all staff in New Zealand.

Other business types (at February 2017):

• 65,480 enterprises operating as trusts/estates

• 10,210 societies and associations (incorporated and unincorporated)

• 3,880 charitable trusts

• a total of 3,220 central or local government organisations (their trading entities included) that employed 389,100.

Note: Business demography statistics only cover economically significant enterprises operating in New Zealand. These are mostly those with an annual GST turnover of $30,000 or more.