The liability which is appropriate to kickstart the business entity in the construction field is personal liability. As the company is to be handled individually, personal liability is regarded as the right format as it reduces the substantial risk that might arise at any point of time. Based on the understanding of sole trading rules, the first year requires filing of personal IR3 statement and provisional tax is applicable for all the subsequent years.
The primary need to setup a business entity in New Zealand is also to conduct a solvency test which means the ability of business owner to pay debts during the business period and the value of liabilities and company’s assets. The proposed business entity does not have any shares at the present and hence, it does not fall under the category of holding company. However, the liability has several points to be noted. Proportionate liability scheme needs to be followed. Additionally, there is no Joint Liability which implies that I am thoroughly responsible towards any activity taking place within the company (Business, 2016).
The ownership format for proposed business entity includes sole trading. As a sole trader in the real estate field, I get the complete authority to control the operations and the laws in New Zealand also allow individuals to easily set up sole trading company. The liability is also unlimited as I will be the sole person to take care of the debts or the profits. Hence, risky situations are totally under my control.
As a construction consultant, I am not looking forward for any sorts of investments as my aim is to bridge the gap between the two. Further, the structure will remain the same for the next few years until the business grows (Government, 2016). Hence, the proposal is to continue with the same ownership format for the next 3 years.
Accounting responsibilities are extremely higher and demand huge responsibilities from the owner.
Based on the understanding on the taxation formats, the entity is prone to service tax. For any profits made, tax amount is entered separately. As a result, income tax is paid for all the individual tax rates arrived from the dividends. There are just two employees that have been proposed for the chosen business entity. One employee is to take care of the technology and update the database of the builders so as to link with customers at a better accuracy. The other employee will take care of customer handling and following up the customer for any quality issues. Mostly, it is the operation that the other person will take care of.
My accountability is extremely large and is a vast list of pointers. Each of them is listed below:
Seek Company Incorporation Certificate and understand the constitutional rules as enforced by the Companies Act 2014
Identify and list accurate details of vendors
Follow Consumer Guarantees Act while suggesting options for the customers
Apply Fair Trading Act to deal between the builders and consumers so as to avoid any intermediary hassles
Ensure that the accounting procedures are right and every transaction is clearly recorded for better reporting and to manage the taxation imposed by the government annually
Follow Employees Act to ensure that both the employees receive complete rights and benefits
Apply Workplace Health and Safety Act to make sure that the space used for the consulting purpose is safe enough and does not cause any hazards in terms of design as well as to the health of the users
There needs to be a clear understanding between the taxable and non – taxable business expenses
There is also a need to seek Practitioner Certificate from the government of New Zealand. This license is compulsory as I offer consulting in a service industry where the direct deals happen with the consumers. In order to connect owners and building professionals, it is also evident that the building analysis needs to be performed so as to offer the right directions (Stewart, 2012). The other relevant legislations appropriate for this division include construction contracts Act 2002 and Building Act 1991 in order to ensure consistency and reliability in the consulting service.