Approximately one in six New Zealand workers is self-employed. Freelancers work as sole traders: they engage clients and send an invoice for the work completed rather than working for an employer and receiving a payslip. Getting set up properly as a freelancer can include securing an Inland Revenue Department (IRD) number, registering for goods and services tax (GST), and setting up Accident Compensation Corporation (ACC) cover.

Below, we'll cover how to become a freelancer in NZ, how to keep your finances in order once the income starts coming in, and challenges that can surprise new freelancers.

Key takeaways

• Although freelancers don't need to officially register as a business, there are logistical steps they need to take when starting.

• Cash flow and provisional tax can surprise new freelancers.

• Payment methods might differ depending on whether you have local repeat, new, or international clients.

How do you become a freelancer in New Zealand?

There's no official required first step to becoming a freelancer in New Zealand, but here are the initial steps freelancers commonly take:

1. Get an IRD number: If you don't have one, you'll need to apply for one to file tax returns. It's the number clients often ask for once your invoices cross a certain threshold.

2. Decide on a structure: It's easy for freelancers to start as sole traders because there's no separate entity to register. Some switch to a business entity once income grows or liability becomes a concern.

3. Register for tax: You must register for GST if you'll cross NZ$60,000 New Zealand dollars (NZD) in 12 months. Registration is optional below that threshold, but some freelancers register early so they can claim GST back on goods or services purchased for their business.

4. Sort out ACC cover: You're liable for ACC earner levies as a self-employed person. Depending on your line of work, you might want to change to CoverPlus Extra to get more control over how much of your income you want ACC to cover.

5. Find clients through the channels that fit your field: Referrals, LinkedIn, freelance platforms, and direct outreach to New Zealand businesses in your industry can all work. The mix that pays off differs by trade.

6. Set your rates through trial and error: Many new freelancers underprice at first, then adjust once they understand how long a project takes and what comparable freelancers in Auckland, Wellington, or Christchurch charge for similar work.

How do freelancers in New Zealand manage their finances?

Tracking income closely from day one can save you from trouble at tax time. Freelancers can use accounting software to log every invoice, categorise expenses, and reconcile bank transactions as they happen.

Cash flow works differently for freelancers than for salaried employees, mainly because income arrives unevenly and clients don't always pay on time.

A few habits can make a big difference:

• Set aside tax money as it comes in: A common approach is moving a percentage of each payment into a separate account right away so you have the money set aside when taxes are due.

• Build a buffer for slow months: Freelance income can shift by project and season. Having a few months of expenses saved gives you room to negotiate instead of disregarding terms and taking the first client who pays.

• Follow up quickly: If payments are late, follow up immediately after the missed due date rather than waiting for the client to remember.

What payment methods work well for a freelancer in New Zealand?

A few payment methods make sense for freelancers in New Zealand.

Bank transfers are often a good fit for local, repeat clients. Domestic transfers between major banks such as ANZ, ASB, Bank of New Zealand (BNZ), and Westpac can clear within a day and don't typically cost the sender anything.

Online payments are a good option for international clients who don't have New Zealand banking or for new, one-off clients who don't want to share their bank details for a single transaction. Payment providers such as Stripe let a freelancer send a client a payment link.

Credit cards are a good fit for clients who would rather pay immediately than schedule a transfer. A freelancer can use a payment provider such as Stripe to accept card payments.

How does invoicing work for freelancing in New Zealand?

In 2023, new laws replaced the requirement to use tax invoices with a more general requirement that those registered for GST simply keep records known as taxable supply information. Invoicing practices that met the old rules also comply with the new rules.

Freelancers can use invoicing software instead of plain document templates. Invoicing software can create these advantages:

• Automated reminders: The software follows up on overdue invoices automatically.

• Built-in payment: Tools connected to a payment provider such as Stripe let a client pay from the invoice rather than having to log in to their bank to make a transfer.

• A running payment record: You can see at a glance which clients pay on time and which don't.

What challenges do freelancers face in New Zealand?

Inconsistent income is the main challenge for freelancers. Freelance income depends on how much work you land in a given month, and the freelance market can have seasonal dips, such as the slowdown around December and January when many businesses pause new project work until the new year. Especially in the first few months of working, finding clients can take up a large share of your working hours, time that isn't billable but is necessary to keep the business running.

Late payment is another challenge. Even with clear terms on the invoice, chasing payment is a recurring task for many freelancers. The Disputes Tribunal handles small claims up to NZ$60,000 NZD, but freelancers often conduct direct follow-ups and send formal demand letters before that point.

New freelancers sometimes underestimate their first tax payment because it's based on assumptions about income that hasn't fully landed yet, and an unexpected bill can arrive right when cash flow is already low.

Finally, isolation and a lack of structure can be challenges of freelancing. Working alone, without colleagues or a manager setting deadlines, means building your own routines and often your own network, whether through coworking spaces in Wellington or Auckland or industry groups online.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business – from scaling startups to global enterprises – accept payments online, in person and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save engineering time with prebuilt payment user interfaces (UIs), access to 125+ payment methods, and Link, Stripe's consumer network.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalise interactions, reward loyalty and grow revenue.

• Improve payments performance: Increase revenue with a range of customisable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments or get started today.

FAQs about freelancing in New Zealand