DIY Business Setup vs Using a Lawyer in New Zealand
An honest guide to when you can set up your NZ business yourself, when you definitely need a lawyer, and the real costs of getting the foundations wrong.
Quick Answer: DIY vs Lawyer
DIY Works When:
- • Sole director/shareholder
- • Simple business structure
- • No partners or investors
- • Low-risk industry
- • Using standard contracts
Use a Lawyer When:
- • Multiple shareholders/partners
- • Buying an existing business
- • Complex structures (trusts)
- • Franchise or licensing deals
- • Significant investment involved
What You Can DIY (And Save Money)
1. Company Registration
Cost: $115.92 online
Time: 10-30 minutes
How: Register at companies.govt.nz - instant approval in most cases
Company registration in NZ is genuinely simple. You need: company name, registered address, director details, shareholder details, and share structure. The Companies Office website guides you through each step.
2. IRD and GST Registration
Free through myIR. GST registration is required if turnover exceeds $60,000/year. Both processes are straightforward online applications.
3. Business Bank Account
Most banks have online applications. Takes 1-5 days. No legal help needed - just your company number and director ID.
4. Basic Employment Agreements
MBIE provides free compliant employment agreement templates. Suitable for standard employment situations. Customisation for complex roles may require legal review.
When You Definitely Need a Lawyer
1. Multiple Shareholders or Partners
Why it matters: Without a shareholder agreement, disputes can destroy businesses and friendships. The default rules in the Companies Act rarely match what partners actually expect.
Cost of getting it wrong: Litigation costs $20,000-100,000+. Business failure. Lost relationships.
A shareholder agreement covers: decision-making, profit sharing, exit strategies, dispute resolution, and what happens if someone wants to leave or dies. These conversations are awkward but essential.
2. Buying an Existing Business
Due diligence requires legal expertise to review: sale and purchase agreement, existing contracts, leases, employee obligations, intellectual property, and hidden liabilities. The seller's lawyer drafted documents to protect them, not you.
3. Commercial Leases
Unlike residential leases, commercial tenants have few protections. A lawyer should review: rent review clauses, make-good obligations, assignment rights, and personal guarantees. A bad lease can cost more than the legal fees to review it.
4. Intellectual Property Protection
Trademark registration, IP assignment from contractors, and confidentiality agreements need legal precision. DIY mistakes can leave your brand unprotected.
5. Franchise Agreements
Franchise agreements are heavily weighted toward franchisors. Independent legal advice is essential before signing any franchise deal.
Cost Comparison
| Task | DIY Cost | Lawyer Cost |
|---|---|---|
| Company registration | $115.92 | $300-600 |
| Constitution drafting | Free (use default) | $500-1,500 |
| Shareholder agreement | Not advisable DIY | $1,500-3,500 |
| Employment agreement | Free (MBIE template) | $300-800 |
| Terms & conditions | $50-200 (template) | $800-2,000 |
| Commercial lease review | Not advisable DIY | $800-2,000 |
| Full setup package | $200-500 | $3,000-6,000 |
The Hybrid Approach (Best Value)
Most smart business owners use a hybrid approach:
- DIY the basics: Company registration, IRD/GST, bank account
- Lawyer for essentials: Shareholder agreement, key contracts
- Template + review: Use quality templates, pay for lawyer review
This approach costs $1,500-3,000 but protects against the expensive mistakes.
Common DIY Mistakes
- No shareholder agreement: Partners assume they agree until they don't
- Generic online contracts: May not comply with NZ law
- Ignoring IP assignment: Contractors may own work they create
- Personal guarantees: Signing without understanding liability
- Wrong business structure: Tax implications not considered
Our Recommendation
Solo founder, simple business: DIY registration + template contracts. Consider one-hour lawyer consultation ($250-400) to check you haven't missed anything.
Multiple founders, significant investment, or buying a business: Use a lawyer from the start. The $2,000-5,000 investment protects against $50,000+ in potential disputes.
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