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Business Entity
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| Your choice of
business entity will depend on whether your company is a wholly
owned subsidiary , a franchise arrangement, a licensee or a distribution
only eg from another country like Australia. |
| The normal choices
of Public and Private Limited Liability companies are available
along with Partnerships (Registered and unregistered) and sole
traders. |
| Independent Contractors
(distributors) may choose these same categories although clearly
the option of a publicly listed company is unlikely. |
| Many DSA member
company distributors choose to separate their business from themselves
by utilizing a Private Limited Liability Company which only requires
two shareholders. This has advantages over the sole trader arrangement
where business assets can be treated autonomously from personal
assets although little overall financial benefit can be gained
unless retained earning are used within the company due to the
lower company tax rate to that of the highest personal rate. |
| We recommend
that any Direct Selling Company setting up in New Zealand very
carefully check the implications of "Withholding Tax"
paid on Commissions and Overide bonuses to Distributors which
have implications to Fringe Benefit
Tax liability. |
| Your Contractual arrangements on your distributor agreements will have much to do which this and should be vetted by a good tax lawyer. |
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