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Over recent months, in the HomebizBuzz Expert Forum and in articles in various publications such as the New Zealand Herald, we have provided detailed answers to many of the commonly-asked questions asked by people who are considering setting up their own company.
Many of the questions have come up again and again, so we thought it would be useful to briefly answer the most common ones in this article.

What is a Limited Liability Company?
Limited Liability Companies are the most common business vehicle in New Zealand and in most western countries around the world. They were invented to recognise that a person should be

able to own shares in a company without having to accept all of the risks associated with that company operating in the marketplace.

A Limited Liability Company (sometimes referred to as a "Registered Company" or an "Incorporated Company") is a company which has been registered with the New Zealand Ministry of Economic Development. It is a company where the liability (risk) of the shareholders is limited to only the amount of money and assets they have put into the business (hence the term limited liability).

So long as the shareholders and/or directors of a company have not done anything illegal or negligent, a shareholder of a Limited Liability Company cannot be made to pay out of there own pocket for the debts of the company.

Registration of a Limited Liability Company also protects the (exact) business name from being used by another company, as well as providing the shareholders with various tax benefits.

What is the difference between a Limited Liability Company and a Sole Trader or Partnership?
A Sole Trader is a person who operates a business without registering it as a Limited Liability Company. They personally carry all of the risk for the operation of their company. A Sole Trader has no protection for their company name and no access to the tax advantages of a Limited Liability Company.

A Partnership is a firm with two or more Sole Traders who cooperate together to run their business. Each partner carries the burden of their own financial risk (as a Sole Trader) in addition to the financial risks generated by their partners.

Does a Limited Liability Company protect me from somebody who uses my business name and/or logo?
A Limited Liability Company is not a trademark. When you have a Limited Liability Company, the exact name of your company cannot be used by another firm, however the only way to ensure complete protection for your company name and/or logo is to register them as trademarks. Unfortunately, this is a fairly expensive and complex exercise.

How do I find out if the company name I want is already in use by another firm in New Zealand?
It is important to check that your preferred company name isn't already being used by another business in New Zealand before you go to the expense of printing business cards, letterhead and advertising material.