Before starting a business you need to consider the franchise business structure to use that will best suit your individual circumstances. The following article will outline the advantages and disadvantages of each structure and share how most Cleantastic business owners structure their businesses.
The common options available are:
Sole Trader Franchise
Partnership Franchise
Limited Liability Company Franchise
Franchise Ownership as a Sole Trader
This is when you trade under your own IRD number, there is only you in the franchise company and all profits or losses will flow through your name for income tax purposes. As you are the business there is no separation between yourself and your business when it comes to liability – if something unexpected goes wrong your personal assets are not protected from business creditors.
However if you trade well and pay your bills on time – there can be little chance of such things happening. This franchise business structure is good if you have minimal risk of things going wrong, it is just you in your business and you’re not really looking to employ staff. Note you can upgrade to another structure further down the track if you need to. There is no cost to setup as a sole trader, you will just need to get registered for GST with Inland Revenue if your sales turnover is going to be over $60,000 pa.
Business Franchise Partnership
The Partnership franchise structure is for when there are two or more people in your franchise business that wish to be owners. If you setup a partnership agreement from the start you can determine what percentage each partner is entitled to of the profits or losses that result from your franchise company. If no agreement is in place it will be a 50/50 arrangement. The partnership gets its own IRD number, profits or losses flow through to the individual partners for income tax purposes.
As with a sole trader there is no separation between yourself and your business when it comes to liability – so your personal assets will be at risk if business creditors are seeking to recover funds from you.
This structure is good if you are a couple who are each putting in the same amount of effort to earn the business income, you may or may not be looking to employ staff. You can upgrade to a Limited Liability Company if required.
There will likely be a cost to setup a franchise partnership relating to the application of an IRD number with Inland Revenue, maybe a partnership agreement and GST registration if your sales turnover is going to be over $60,000pa.
Franchise setup as a Limited Liability Company
This structure provides you as the business owner protection from the business creditors (people who you owe money) should things turn sour. Anything you personally guarantee though won’t be covered by this limited liability.
You can be the only owner or have multiple owners of the business and each owner has shares. The proportion of shares each person has determines their ownership percentage of the company. The company gets its own IRD number and there is the ability to be flexible when it comes to distributing profits (and losses in some cases).
You can also have a company name and no one else can have exactly the same name – this can be good for branding if that interests you.
This is the most robust structure and is great if you are going into business with your partner, spouse or someone not related to you. It also can save you income tax because of the ability to spread profits across different taxpayers.
The Most Popular Business Structure for Cleantastic Franchise Owners
We recommend all of our Franchise Owners receive advice about the best business structure for them from a firm like Kiwitax before making the decision. 76% of all Cleantastic Business Owners as at Dec 2014 chose the Limited Liability Structure as the most suitable for their needs.
There is a cost to setup a company – ranging from $160-$600 depending on how much you wish to do yourself. The company is registered with the Companies Office and then an IRD number and GST registration (if applicable) is applied for with Inland Revenue.
Disclaimer:
This overview is intended as a guide only and we would recommend you chatting to one of our team before you purchase or start a business to make sure you’re fully aware and comfortable with the best structure for your personal situation.
New Zealand now has a population of 4,466,000 people as of May 2013. Many Fijian Indians move to New Zealand for better earning and the better career opportunities available to them in New Zealand. There are now 10,929 Fijian Indians in New Zealand with 73% living in Auckland and 93.9% in the North Island. This is a huge jump since 2006 when under 6,000 lived in New Zealand. Wellington, Waikato and Canterbury are the next big three areas where Fijian Indian people find work.
Earning Potential in New Zealand
The median earning for Fijian Indian men is $34,900 and for women $21,600. 65% earn this through wages compared to just 8.4% from being self employed. Compare this to the general population where 15.4% are self employed.
Cleantastic Business Operators
Many of our business owners are earning up 40,000, 50,000 or sometimes up to $60,000 from local opportunities by starting their cleaning business in Auckland, or taking advantage of new opportunities outside of Auckland in Waikato, Christchurch, Wellington and Hawke’s Bay. There is an income gap between what many immigrants are paid in salary and what they can earn by working independently through their own business. We try and help migrants start their own business with the confidence of guaranteed work supply and tried and true business processes.
Watch Isher talk about making the decision
Needs replacement with video of Fijian Indian franchise owners.
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Auckland now has a vibrant Chinese community of 118,230 people making up 2.6% the entire Auckland population. Increasingly Chinese are choosing different areas of New Zealand to live now that communities are well established in Wellington and Christchurch. Nearly 20,000 Chinese now live in the South Island, and much of the growth is coming from opportunities in Christchurch since the earthquake.
Many Chinese look at outside of Auckland because of the better chance to own their own home. 37.8% of Chinese had moved residence within New Zealand at least once in the last five years. New Zealand now has a population of 4,466,000 people as of May 2013. There are now 171,411 Chinese in New Zealand, up 16.2% on 2006.
Earning Potential in New Zealand
The median earning for men is $19,100 and for women $14,100. Chinese have embraced business ownership with just as many Chinese owning businesses as the wider New Zealand population at 15.4%.
Cleantastic Business Operators
Many of our business owners are earning up 40,000, 50,000 or sometimes up to $60,000 from local opportunities by starting their cleaning business in Auckland, or taking advantage of new opportunities outside of Auckland in Waikato, Christchurch, Wellington and Hawke’s Bay.
There is an income gap between what many immigrants are paid in salary and what they can earn by working independently through their own business. We try and help migrants start their own business with the confidence of guaranteed work supply and tried and true business processes.
Watch Zhao Yue (Jack) talk about making the decision
Cleantastic have recently hired a new Regional Manager for Christchurch. We asked Andrew Lester what he has planned for commercial cleaning services as Christchurch rebuilds.
“I’ve been in the service industry for 7 years at a plumbing company and recently joined Cleantastic. My history working with franchisees goes back multiple years including having been the franchise manager for Goodman Fielder. I joined Cleantastic to get back into developing my career.”
Keeping Christchurch new builds gleaming
As the Christchurch rebuild gathers pace, Andrew is lining up the huge opportunities that new builds will create. “There’s a huge amount of potential cleaning with the rebuild. New owners of nice new shiny buildings will want to maintain that level of newness. We’re making a real commitment to Christchurch especially the Riccarton and Addington areas in the short-term and the CBD longer term. Commercial buildings almost always require commercial cleaners”.
Christchurch Commercial Cleaning Franchise Opportunities
With the first phase of demolishing damaged buildings nearing completion, the next stage of construction is slowly starting to gather pace. “Franchise opportunities exist in Christchurch right now. Clients have been dislocated and ask us to clean their office. From my experience, franchise owners want to be their own boss, but want the security of someone backing them up. With my franchise background, I can see there’s a good support network there with Cleantastic. We’re looking for business focussed workers who are hands on business people. Reliability, desirability and compatability are key.” says Andrew.
Outside of Christchurch
“From a South Island perspective, there’s going to be growth in Christchurch and that’s wonderful. We are also doing a lot in Timaru, and have established a good start in Blenheim. There’s a huge opportunity in Dunedin as students population and the locations that service them do need help for people to clean up after them!”
“Dunedin contrasts with the clean and green living of Nelson. There’s demand there and opportunities for franchise owners to live a fantastic lifestyle. At the top of the South Island, Nelson gets the highest number of sunshine hours per year. We’re not limited by distance either, we can get to Invercargill and as a wee town it’s very close knit. If you can get a reputation there, you can achieve anywhere.”
The number of South African’s now living in New Zealand has skyrocketed in the last 8 years, having doubled to over 28,656. Since the Long Term Business Visa’s were stopped around 4 years ago, more recent South African migrants are helping close the skills shortage gap in key industries such as health and education. Partners of the visa holder are also able to work in New Zealand and can even purchase their own business.
South Africans have tended to settle in a wide variety of locations across New Zealand, perhaps searching for seaside locations that remind them of home. Outside of Auckland, popular regions to live for South Africans are Bay of Plenty, Hawke’s Bay, Taranaki, Manawatu, Wanganui and Otago which may have something to do with living where they can find work.
Earning Potential in New Zealand
It can be difficult to take large sums of money out of South Africa, so earning as soon as arriving in New Zealand is important. Median earnings for men is very good $50,500 and for women $27,300. This may be because of the high level of qualifications they bring with them to New Zealand with 96.5% of migrants having a formal qualification. The main issue is finding a job in their area of qualification.
Cleantastic Business Operators
Many of our business owners are earning up 40,000, 50,000 or sometimes up to $60,000 from local opportunities by starting their cleaning business in Auckland, or taking advantage of new opportunities outside of Auckland in Waikato, Christchurch, Wellington and Hawke’s Bay. This is ideal for South African immigrants who cannot find a role in their area of expertise.
We help South African migrants learn to run their own business with confidence, while offering guaranteed work supply and tried and true business processes.
Watch Megan & Franco talk about making the decision
We help South African migrants learn to run their own business with confidence, while offering guaranteed work supply and tried and true business processes.
THE WORLD IS COMING TO NEW ZEALAND SERIES #1
17,500 people migrated to New Zealand in 2013, numbers not experience in over a decade. Big changes in Australia’s economy have changed where people are deciding to emigrate to, and New Zealand is now a serious consideration for many.
Where should I live when I get to New Zealand?
Whether you have just arrived in New Zealand, been here for a year or two, or are thinking of migrating, there’s lots of information you need to know. The first question is usually, where should I live?
Should I move to Auckland or outside Auckland?
Auckland has a huge immigrant community, so you’re bound to meet more people from your home country. It’s also the largest city in New Zealand and growing fast, so there’s bound to be opportunity for you there. Some immigrants choose regional New Zealand, such as Hawke’s Bay because of the laidback lifestyle, and some move to Christchurch where a huge rebuild effort is underway.
Find out more about the locations you are looking at settling in.
What is life like outside of Auckland?
Watch this video where migrants talk about what life is like in sunny Hawke’s Bay on the east coast of the North Island of New Zealand.
Life in Hawke’s Bay, New Zealand
Watch a South African couple share their story of migrating to New Zealand through to running their own business in Hawke’s Bay.
Will I find work outside of Auckland?
We have guaranteed work supply in these locations right now including Waikato, Christchurch, more in Wellington and Hawke’s Bay. In Auckland there is some work, up towards Warkworth. Bay of Plenty, Taranaki and Dunedin all have work opportunities going, if you decide one of these regions is where you would like to love.
What else do I need to know?
In the next The World is Coming to New Zealand Series #2, we will share everything you need to know to setup your own business in New Zealand.
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