New Zealand rightly gets credit of being an easy place to do business, but sometimes we forget. As a reminder here’s an excerpt from an article on the tax implications of Kickstarter projects:
In the United States, if you accept money for goods or services above a certain threshold, or at all for certain kinds of work, you probably require all of the following:
- A business license in every city in which you work in person. If you make something and deliver it, it’s possible you need a license in the destination city.
- A state business license, which is connected with state sales or other taxation. The license may have specific extras you need, such as an assumed business name (the dba, “doing business as”) or registration for certain kinds of business. (Many business types, varying by state, require registration, certification, licensing, a degree, bonding, and insurance!)
- A reseller certificate or exemption permit if you buy services or goods at wholesale intended for resale. For instance, in my case, as a new book publisher, I need to give a copy of this permit to the printer that is making my hardcover books. It needs it for its files so that it, in turn, can show its taxing authority that it properly did not need to charge me sales tax on its sale of finished items.
- A federal Employer Identification Number (EIN), which is used by businesses in lieu of a Social Security Number (SSN).
In New Zealand you need a GST number.
Tax is much much more complex in the USA as well, with city, county, state and federal income taxes for businesses and individuals, taxes along with sales taxes and even a use tax, on items that you buy from outside the state and use within the state.
Our own taxation system is structurally far better. It’s still far more complicated than it needs to be, but there seems to be a recognition that it needs to improve, with some recent moves to reduce the pain. However there is still a long road ahead, and the IRD’s very scary IT project to complete.
While the USA market is unfathomably vast, it is expensive and painful to start or grow a business in the USA, and these regulatory barriers to entry are to the advantage of incumbent or well-financed businesses.
It’s obvious that having a presence in the USA and other large markets is important for NZ exporters, even web-based ones, but addressing the world from New Zealand does have significant advantages. And we get to live here too.