Legal advice for start ups

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“Only a life lived for others is a life worthwhile.” ~ Albert Einstein*

*In response to a question asked by the editors of Youth, a journal of Young Israel of Williamsburg, New York. Quoted in the New York Times on June 20, 1932 page 17.

Whether you’re just starting out or you’re already in business, it’s important to understand the benefits of different business structures.

Companies are separate legal entities which provides shareholders with limited liability from any of the business’s debts beyond the value of their shares in the company (this is what Limited for in a company name). A Limited Liability Company offers a lot of advantages such liability protection and increased credibility. It is also easier to raise capital for a Limited Liability Company as opposed to sole proprietorship or partnerships. And who couldn’t do with more capital?

Shareholder income is taxed at a different rate to the company itself. All companies have to declare their director and shareholder details by registering for incorporation with

To set up a private limited company you need to register with the Companies Office. It costs NZ$163.55 and you will need:

  • a company name
  • a registered address for the company
  • at least one New Zealand based director
  • at least one shareholder
  • a shareholder agreement
  • company constitution

Advantages:

  • Liability protection
  • More credibility in the marketplace
  • Easier to attract funds and investment (investors can become shareholders)
  • Easier to sell the business

Disadvantages:

  • Directors need to clearly understand their responsibilities
  • Limited liability advantages are often eroded by the requirement to provide personal guarantees creditors