So you’ve decided freelancing is for you — or at least worth trying. Before you take on paid work, there are a few practical things to sort out. None of them are complicated, but doing them in the right order saves a lot of headaches later.
The good news: most of this is a one-time setup. Do it once, do it properly, and you won’t have to think about it again.
Step 1: Register with IRD
This is non-negotiable and needs to happen before you earn any income from freelance work.
In NZ, all income is taxable — including freelance, contract, and side-hustle income. If you’re already employed, you’ll have an IRD number. If not, you can apply for one free at ird.govt.nz.
Once you have your IRD number, make sure you’re registered as a contractor or self-employed individual. The tax rate you pay depends on your expected annual income — IRD has an online estimation tool to help you figure out the right tax code.
One important thing: if you don’t have a tax code registered with IRD, you’ll be taxed at 45 cents in the dollar instead of the standard rate. Register before you invoice anyone.
The tax year in NZ runs from 1 April to 31 March. You’ll need to file an IR3 return, usually due by 7 July each year. IRD has good online tools and demos to walk you through this — ird.govt.nz/income-tax-individual/end-year/ir3
Step 2: Open a separate bank account
Do this before your first payment arrives. Mixing business and personal money is one of the most common mistakes new freelancers make — and it creates a real mess at tax time.
You’ll actually want two separate accounts:
Account 1: Trading account
This is where client payments land and where you pay business expenses from. Think of it as your business’s current account.
Account 2: Tax savings account
Every time money comes into your trading account, immediately transfer at least 30% into this account. Don’t touch it. This is your tax money — it belongs to IRD, you’re just holding it until it’s due.
The 30% rule feels painful at first, especially on smaller jobs. But it becomes a non-negotiable habit that saves you from a very stressful conversation with IRD later. Many freelancers who’ve been caught out will tell you: the worst financial mistake they made was spending money they hadn’t paid tax on yet.
As a sole trader, you can set these up as separate accounts within your personal bank. As a company, you’ll need dedicated business accounts.
Step 3: Find an accountant
An accountant is not a luxury — for most freelancers, it’s one of the best investments you can make. A good accountant will:
- Make sure your tax gets filed correctly and on time
- Help you claim all the deductions you’re entitled to
- Advise you on whether GST registration makes sense for you
- Keep IRD happy so you don’t have to think about it
For software, Xero is the most widely used accounting tool among NZ freelancers and small businesses, and most NZ accountants work with it. It’s not free, but it’s worth it once you’re invoicing regularly.
If you’re not ready for an accountant yet, Hnry (hnry.co.nz) is a great option for early-stage freelancers — for 1% of your income (capped at $2,000/year) they handle your tax payments, GST, and IRD compliance automatically. Several NZ freelancers in the creative and tech space use it and find it removes the financial admin stress entirely.
Step 4: Sort out GST
GST (Goods and Services Tax) is currently 15% in NZ. Whether you need to register for it depends on your income:
- Under $60,000/year turnover: you don’t have to register, but you can choose to
- Over $60,000/year turnover: registration is compulsory
Voluntary registration can make sense even early on because:
- You can claim back GST on business purchases (software, equipment, etc.)
- It can look more professional to corporate clients
The downside is you’ll need to file regular GST returns, which adds admin. Talk to an accountant before deciding — it’s not right for everyone at the start.
Official IRD details: ird.govt.nz/gst
Step 5: Get insurance
This one gets skipped a lot — don’t skip it.
Professional indemnity insurance protects you if your work or advice causes financial harm to a client. This covers things like alleged errors, copyright infringement, or plagiarism claims. Even if you’re careful, mistakes happen — and in the creative and tech industries, the cost of a dispute can be significant.
Public liability insurance covers you if you cause accidental damage or injury in the course of your work — relevant if you ever work on-site with clients.
Talk to an insurance broker about what makes sense for your type of work. Costs vary but are generally reasonable for freelancers working at small-to-medium scale.
Also worth knowing: as a self-employed person in NZ, you’ll pay an ACC levy to cover compensation for non-work-related injuries. This is separate from your income tax and is calculated based on your income. Read more at acc.co.nz.
Step 6: Set up your tools
You don’t need a lot to get started, but a few basics make everything run more smoothly.
A work email address
A professional email address — even just yourname@gmail.com if you don’t have a domain yet — matters more than people think. Sending invoices from a personal address you’ve had since high school doesn’t inspire confidence.
If you have a domain name, set up an email address through it. Domain names are around $20/year from providers like Crazy Domains, GoDaddy, or Freeparking.
An invoicing tool
Options range from free to paid:
- Wave — free, simple, good for starting out
- AND.CO / Bonsai — popular with creative freelancers, has contract templates too
- Hnry — handles invoicing alongside tax
- Xero — the full accounting suite, worth it once you’re established
Whatever you use, make sure your invoices include: your name/business name, your IRD number, invoice number, client details, job description, breakdown of time or deliverables, your rate, total amount, payment due date, and your bank account details.
Time tracking
If you’re billing by the hour, you need to track your time accurately. Free tools that work well:
- Toggl — the most popular, simple and clean
- Clockify — free forever tier, good for solo freelancers
- MyHours — straightforward and free
- RescueTime — also tracks how you’re spending your time overall, useful for self-awareness
File organisation
Set up a consistent folder structure from day one and keep it. A simple structure like Client → Project → Working Files / Final Files / Invoices goes a long way. Keep records for at least 7 years — IRD can audit you that far back.
A useful reference for file organisation: sprucerd.com/blog/how-to-organize-your-files
Step 7: Sort your online presence
You don’t need a fully built website to start freelancing — but you do need somewhere to send people when they ask about your work. See [Getting Work Without a Website] for the full breakdown, but at minimum:
- A complete, professional LinkedIn profile with your services listed
- A portfolio — even a PDF or a Behance/GitHub profile — that shows your best work
- A work email address on everything you send
Your social media, portfolio platform, and online presence can grow as your freelance work grows. Don’t let “I need to finish my website first” delay you from starting.
The setup checklist
Before you take on your first paid job:
- IRD number obtained and tax code registered
- Separate trading bank account (or sub account) open
- Separate tax savings account open (30% rule in place)
- Accountant found, or Hnry set up
- GST situation understood (register or decide not to yet)
- Professional indemnity insurance sorted
- ACC levy understood
- Work email address set up
- Basic invoicing tool chosen
- Time tracking tool chosen
- File folder structure set up
- Portfolio or online presence ready to share
Next in the series: [Finding Clients & Getting Work — portfolio, networking, volunteering, agents, and platforms.]