Going Self-Employed as a NZ Tradie — Your Complete Start-Up Checklist

Going out on your own is one of the best decisions a tradie can make — more control, better pay, and no one else's rules. But the first few months are a minefield of admin if you don't know what you're setting up. This guide covers every step, in order.

Step 1 — Choose Your Business Structure

Most new self-employed tradies start as a sole trader. It's the simplest structure: you trade under your own name (or a registered business name), there's no separate company, and your business income is treated as personal income for tax.

The alternative — setting up a company (limited liability) — makes sense at higher income levels and provides some personal liability protection, but adds accounting complexity and compliance costs.

Rule of thumb: Start as a sole trader. Revisit the structure once you're consistently earning $90k+ net profit. Read our full guide: Sole Trader vs Company — Which Saves the Most Tax?

Step 2 — Register with IRD

You must notify IRD that you're self-employed. Do this at ird.govt.nz or by calling them.

You'll need: - An IRD number (if you don't already have one — most NZers do) - To advise IRD you're now a sole trader earning self-employment income

Once registered, IRD will expect you to file an IR3 (individual income tax return) each year and pay provisional tax if your tax bill exceeds $5,000.

Set aside 25–30% of every invoice payment for tax from day one. This is the single most important financial habit for a new self-employed tradie. Many new operators get hit with a surprise $15,000+ tax bill in their second year because they didn't save as they went.

Step 3 — Register for GST (if applicable)

You must register for GST when your turnover exceeds $60,000 in any 12-month rolling period. You can also register voluntarily before that threshold.

Once GST-registered: - Add 15% GST to all your invoices - File GST returns (usually every 2 months) with IRD - Claim GST back on business purchases (materials, tools, fuel, etc.)

Don't wait until you're rushing past the threshold — it creates a messy catch-up period. If you're anywhere near $60k turnover, register early.

Full guide: Should I Register for GST?

Use our GST Calculator to check your invoices.

Step 4 — Sort Your ACC

As a self-employed person, you pay ACC levies — they're not optional. ACC covers you if you're injured in an accident (work or non-work). It does not cover illness.

ACC levies are: 1. Work levy — based on your trade (roofers pay more than electricians) 2. Earner levy — flat 1.33% for non-work injuries 3. Working Safer levy — 0.08% (tiny, funds WorkSafe NZ)

Your first ACC bill can come as a shock. Use our ACC Levy Calculator to estimate what you'll owe before it arrives.

Important: ACC covers accidents only. For illness cover, look at income protection insurance (see Step 7).

Step 5 — Get the Right Insurance

Minimum coverage every self-employed tradie needs:

Public liability insurance — covers you if you damage a client's property or injure a third party. Most clients and principal contractors require at least $1M cover. Costs $400–$1,200/year depending on your trade and turnover. Read: Public Liability Insurance Guide

Tools and equipment insurance — covers theft or accidental damage to your tools. Vehicle glass cover is also worth adding. Ask your insurer about agreed-value vs replacement-value policies.

Income protection insurance — covers up to 75% of your income if you can't work due to illness or injury (including conditions ACC won't cover). This is especially important as a sole trader — if you can't work, you don't get paid. Read: Income Protection Insurance Guide

Step 6 — Set Up Your Invoicing and Record-Keeping

IRD requires you to keep business records for 7 years. This includes: - All invoices issued and received - Bank statements - Receipts for business expenses - Vehicle logbook (if claiming vehicle expenses)

Options for invoicing and records: - Spreadsheet — fine when starting out, becomes painful quickly - Xero or MYOB — full accounting software, GST returns prepared automatically (~$30–$50/month) - Tradify, Fergus, or Simpro — job management apps that include invoicing - Fastcrew — all-in-one NZ tradie app with jobs, quotes, invoicing, and compliance

Use our free Quote Template and GST Tax Invoice Template to get started without software.

Step 7 — Price Your Work Correctly

Most new self-employed tradies undercharge because they only think about the hourly rate — they forget to factor in tax, ACC, no-work gaps, vehicle, tools, insurance, and public holidays.

Use our Hourly Rate Calculator to build a rate that covers all your costs.

The minimum rate formula: Take your target take-home, add tax (~28%), add ACC (~3–5%), add overhead costs (vehicle, insurance, phone, tools), divide by billable hours per year (typically 1,200–1,600 for a sole trader). That's your minimum rate.

Also read: How to Price a Job as a NZ Tradie

Step 8 — Get Your Contracts Right

Never start work without a written agreement — even a simple one. A quote or scope of works that the client has accepted in writing is better than nothing.

Key things to cover: - Scope of work — what you will and won't do - Price — fixed price or time and materials? What happens with variations? - Payment terms — deposit amount, when invoices are due (7 or 14 days), progress payment schedule - Variation process — how changes to scope will be quoted and approved in writing - Completion timeline — realistic dates, who's responsible for delays

The Construction Contracts Act 2002 (CCA) automatically applies to construction contracts and gives you the right to make payment claims and suspend work for non-payment.

Free templates: Quote Template · Variation Order · Terms of Trade

Step 9 — Understand Provisional Tax Before Year Two

Provisional tax is how self-employed people pre-pay income tax for the current year. You pay it in instalments (August, January, May) rather than one lump sum at year end.

The trap: you don't pay provisional tax in your first year of self-employment. You pay it in year two — and it's calculated based on what you owed in year one. So if year one goes well, year two can hit with a $20,000+ tax bill you weren't expecting.

The fix: set aside 25–30% of every payment into a separate savings account from day one. Read our full guide: Provisional Tax for NZ Tradies

Use the Cash Flow Forecast Calculator to plan your reserves.

Step 10 — Check Your Licensing and Compliance

Depending on your trade, you may need:

Trade	Requirement
Builders / Carpenters	LBP licence for Restricted Building Work
Electricians	Licensed by Energy Safety (ECan)
Plumbers / Gasfitters / Drainlayers	Registered with the PGD Board
Gas appliance servicing	Certifying gasfitter
Excavation near services	Dial Before You Dig notification

LBP (Licensed Building Practitioner): Required for structural work, weathertightness, foundations, and cladding on homes and small buildings. Check your obligations at lbp.govt.nz.

Health and Safety: As a PCBU (self-employed person), you must manage workplace risks under HSWA. For most sole traders on-site, this means hazard identification, using appropriate PPE, and having an emergency plan. Download our free SWMS template.