FAQs

Sole Trader:

• Your business is run under your own name, and you’re personally liable for any debts or issues such as loss or damage your business may accidentally cause.

• Profits are taxed directly under your personal name.

• It's straightforward to set up and easy to manage, making it ideal for smaller or part-time operations.

Company:

• A company is a separate legal entity, meaning it has its own rights and obligations, much in the same way a real person has.

• Business liability is attached to that legal entity ("person") which protects the underlying owners (i.e. you) if something goes wrong.

• Business profits are taxed at two points, first under the company, currently at 28%, and again when paid out later to the owners as dividends. You receive a credit for the 28% tax already paid, but there is often a top-up tax payable to increase the total tax to the individual tax rate.

• Running a company is more complex and requires additional compliance, such as detailed record-keeping, Financial Statements and annual returns.

The decision to operate as a sole trader or form a company depends on factors such as your business size, growth plans, number of owners, and the level of risk involved.

• Starting size of the business: If your business starts at a reasonable scale or you want to present a more professional image, forming a company is generally considered standard practice in New Zealand. Creditors and lenders often expect businesses of a certain size to trade through a company structure. In many cases, a larger business also faces greater risks, making the protection of a company structure more appropriate.

• Future growth plans: If you start out small but anticipate expanding, it may be more cost-effective to start with a company to avoid additional expenses in forming one later. As a company is a separate legal entity, any business contracts (i.e. insurance, leases, loans) you hold as a sole trader will need to be transferred to the company, which can be time-consuming and costly.

• Multiple owners or investors: If you plan to have several investors or anticipate bringing in new owners over time, operating through a company can be a good choice. A company’s share structure makes it easier to issue or transfer ownership interests compared to other business types.

• Business risks: If your business is exposed to significant risk, then it is common practice to form a company to limit that risk. While insurance can help mitigate some risks, it doesn’t offer full protection. A common example is health and safety risk associated with employees in industries where physical harm may occur, such as construction. Under the Health and Safety at Work Act 2015, a sole trader can be fined up to $600,000 for a serious breach and by law these fines cannot be covered by insurance.

You must register for GST if your company turnover (sales from taxable activities):

• was over $60,000 for the last 12 months, or

• is expected to go over $60,000 for the next 12 months.

A business must have a taxable activity to register for GST. A 'taxable activity' is an activity that is carried on continuously or regularly, and involves or is intended to involve the supply of goods or services to another person for consideration (i.e. money). Businesses, trades and professions are examples of taxable activities.

Activities such as hobbies are not considered taxable activities, and long-term residential rentals are specifically excluded from the GST taxable activity definition.

If you are under the registration threshold and you are carrying on a taxable activity, you can voluntarily register for GST.

For further details please refer to a current IRD IR375 GST Guide, freely available in PDF format.

CoDIY does not offer company formation services. However, you can set up your company through one of the following options:

• A company formation specialist

• Directly through the Companies Office – You can register online via their website (denoted with a .govt.nz domain), which is easy to navigate and complete.

• A full-service accountant

Once your company is registered, you'll need to file an annual return each year with the Companies Office. This includes updating your contact details and paying a small fee.

CoDIY gives small company owners confidence in their numbers while they handle their own day-to-day tax obligations, such as GST. With an annual Chartered Accountant year-end review and Income Tax filing, owners can be confident that:

• Their Income Tax is filed correctly and on time.

• Their GST is reviewed once a year for peace of mind and accuracy.

• They receive Income Tax filing and payment extensions through a registered tax agent.

• They receive IRD-compliant, accurate annual Financial Statements, which are also required by lenders, investors, and for future business sales.

CoDIY may be a great stepping stone for small companies that plan to grow and will eventually need full-service accounting. However, many small companies will find CoDIY suitable year after year, resulting in significant savings.

A full-service accountant typically charges between $2,000 to $3,000+GST per year for a small company, compared to $399+GST with CoDIY. Over ten years, this could save you between $16,000 and $26,000 in accounting fees.

CoDIY works with small companies across a range of industries, including (but not limited to):

• Construction and trade

• Professional services

• Residential rentals

• Commercial leasing

• Investment

• Retail and wholesale

• Hospitality

• Transport

To check if your business qualifies for CoDIY, please complete our quick qualifying questionnaire on the homepage.

Managing day-to-day compliance is easy, and for most small companies will predominately consist of:

• Reconciling your accounting software (e.g. Xero or MYOB) to ensure all transactions are coded correctly and bank balances match. The process is quick and intuitive, and with most software providers now integrating AI, it’s easier than ever.

• Maintaining records of all your business transactions, such as invoices, bank statements, loan statements. Records must be kept for seven years, and can be conveniently stored directly in your accounting software.

• Filing and paying GST, made easy through your accounting software once transactions are reconciled.

• Filing employer returns and paying PAYE, either through a payroll service (e.g. Smartly, PayHero) or directly via your accounting software.

• Managing income tax provisional payments, as outlined in the company and shareholder myIR accounts.

• Filing annual Companies Office returns, which are quick and easy to complete — the Companies Office will send email and text reminders when due.

Extensive guidance is available on the IRD website, from your accounting software’s help centre, payroll provider resources, and the Companies Office website.

Switching to CoDIY from a full-service accountant, Hnry, or DIY is simple:

From a full-service accountant:

• Provide us with your accountant’s name and contact details, and give permission for us to reach out to them to complete the transfer.

• If your accountant handles day-to-day compliance such as GST, ensure you are ready to take over these responsibilities. Alternatively, you can continue with your full-service accountant temporarily for support, then switch to CoDIY once you are comfortable with day-to-day compliance.

From Hnry:

• Export all income and expense records from your Hnry account for the financial year (typically from 1st April to the date your company takes over trading).

• While it's easiest to switch at the start of the tax year (1st April), it's not essential. However, if you are GST registered, switching at the end of a GST period, not part-way through the period, will help reduce potential errors.

• You will need to be comfortable managing day-to-day compliance. CoDIY doesn’t offer direct support, but extensive guidance is available online from the IRD, your accounting software's help centre, payroll provider, and the Companies Office.

From full DIY:

• Great job managing your own compliance! Keep your accounting systems and records in place. As CoDIY is an annual service we will ask for these tax records at the same time your company is scheduled to file its annual return at the Companies Office.

For most small trading companies, accounting software is the most efficient way to track income and expenses, manage overdue debtors, and file GST returns. This also allows CoDIY to offer its service at such an affordable cost. We work with all software providers.

For small companies with 15 or fewer bank transactions per month, such as small residential rental or commercial lease companies, CoDIY can accept bank statements in PDF format without a subscription to accounting software.

To provide services to your company, we require:

• A signed IRD Authority to Act form from the company’s Directors.

• A signed Chartered Accountant Engagement Letter and annual questionnaire from the company’s Directors.

These documents will be emailed to you in your first year after payment of the $49+GST tax agency fee. In subsequent years, these documents and a request for the $49+GST annual tax agency fee will be sent each March.

CoDIY will not proceed with services until each payment request is paid in full.

At CoDIY, we aim to make accounting simple and stress-free — but if something hasn’t met your expectations, we’re committed to resolving it quickly and fairly.

To help us understand and sort out your concern, please include the following details when you get in touch:

• Your name and contact details (email and/or phone, and the best time to reach you)

• A brief description of your concern or issue

• What you’d like us to do to address your concern or issue

• Any supporting information (if relevant)

How to contact us

You can reach us any time through our website: www.codiy.co.nz/contact or by email at: support@codiy.co.nz

Our complaints process

We’ll acknowledge your complaint within 5 working days, and wherever possible, we’ll aim to resolve it straight away.

Where we need more information, we will contact you with a request for this information within 10 working days of lodgement of the complaint. After receiving all necessary information, we will aim to resolve your complaint as quickly as possible.

CoDIY is a standalone annual service, not a recurring subscription. You only pay when the service is performed, apart from the small annual sign-on fee.

• Annual sign-on fee: Each year you will receive a $44+GST tax agency fee request. If you do not wish to continue, simply reply to that email or contact us anytime to be removed from our services.

• Refunds and fees:

  • If you’ve paid the $49+GST tax agency fee but not the $175+GST preparation fee, the $49+GST will be refunded.

  • If the $175+GST preparation fee has been paid, we reserve the right to request full payment for that year and complete the services before removing your company from our client list.

• Important compliance note: If your company is removed after 7th July and you do not engage another tax agent, you may incur a late filing penalty from the IRD. To avoid this, it’s helpful to notify us when the annual sign-on fee request is sent in March if you plan to handle all compliance yourself.

• If your company no longer qualifies for CoDIY: We will notify you either in the annual Financial Statement letter for the prior year or within 10 working days of receiving your returned signed annual questionnaire (sent each March).