Accounting for Tradies: What Every Self-Employed Tradie in NZ Needs to Know

If you are a self-employed tradie in New Zealand — builder, electrician, plumber, painter, landscaper, or any other trade — you are running a business whether you think of it that way or not.

That means tax obligations, GST, ACC levies, and a whole lot of paperwork that can pile up fast if you are not on top of it. Most tradies we work with are brilliant at their trade and hate the admin side. That is completely understandable. But getting the basics right from the start saves a lot of pain — and money — later.

Here is what you need to know.

Most tradies start out as sole traders. It is simple, cheap to set up, and there is minimal administration. But as your income grows, a sole trader structure can start to cost you.

As a sole trader, all your business income is personal income. You pay income tax at your personal marginal rate — up to 39% on income over $180,000. There is no separation between you and your business, which means your personal assets (home, savings, vehicle) are exposed if something goes wrong.

As a company, you pay the flat 28% company tax rate on retained profits. You can also control how you pay yourself — salary, dividends, or a combination — which gives you more flexibility to manage your tax position. And because a company is a separate legal entity, your personal assets have a layer of protection from business liabilities.

The general rule of thumb: if you are consistently netting more than $70,000–$80,000 per year from your trade, it is worth talking to an accountant about whether incorporating makes sense.

If your turnover exceeds $60,000 in any 12-month period, you are required to register for GST. Many tradies hit this threshold quickly, especially if they are doing larger jobs or working for commercial clients.

Even if you are under the threshold, voluntary registration can make sense — particularly if you have significant business expenses (tools, materials, vehicles) where you can claim GST back.

Once registered, you need to file GST returns — either monthly, two-monthly, or six-monthly depending on your turnover and preference. The key discipline is keeping your GST money separate. Every time you invoice a client, 15% of that invoice belongs to IRD. Treat it that way from day one.

Common GST mistakes tradies make:

• Spending the GST portion before the return is due
• Not keeping receipts for business purchases
• Forgetting to claim GST on tools, equipment, and materials
• Mixing personal and business expenses

If you owe more than $5,000 in income tax at the end of the year, IRD will put you on provisional tax the following year. This means you pay your estimated tax in instalments throughout the year — rather than one lump sum after the fact.

For tradies who have never dealt with this before, the first provisional tax bill can be a shock. You are essentially paying next year's tax before you have finished earning it.

The fix is simple: set aside a percentage of every payment you receive into a separate account. A rough guide:

• Sole trader, income under $70k: set aside around 20–25%
• Sole trader, income $70k–$120k: set aside around 28–33%
• Company: set aside 28% of net profit

Your accountant can give you a more precise figure based on your actual situation.

One of the biggest advantages of being self-employed is the range of legitimate deductions available to you. These reduce your taxable income — and therefore your tax bill.

Common deductions for tradies include:

• Tools and equipment — hand tools, power tools, safety gear
• Vehicle costs — either actual costs (fuel, maintenance, insurance, depreciation) or the IRD mileage rate for business travel
• Work clothing — branded workwear, safety boots, hi-vis gear (not general clothing)
• Phone and internet — the business-use portion
• Home office — if you do your admin from home, a portion of home costs may be deductible
• Training and licences — trade-specific training, licence renewals
• Accounting fees — yes, your accountant's fees are deductible
• ACC levies — the work levy portion is deductible
• Subcontractor costs — if you bring in subbies, their invoices are deductible

The key is keeping records. IRD can ask you to substantiate any deduction, so receipts, invoices, and a basic record of business use are essential.

The vehicle is often the biggest grey area for tradies. Most tradies use their ute or van for both work and personal use, which means you need to apportion the costs correctly.

There are two methods:

Actual cost method: Track your total vehicle costs (fuel, insurance, WOF, registration, repairs, depreciation) and claim the business-use percentage. You need a logbook for at least 90 days to establish your business-use percentage.

IRD mileage rate: Claim a set rate per kilometre for business travel. For the 2025–26 year, the rate is 73 cents per kilometre for the first 14,000km. Simpler, but may not capture all your actual costs.

If your vehicle is used almost entirely for work — and you have another personal vehicle — you may be able to claim a higher proportion. Talk to your accountant before making assumptions.

As a self-employed tradie, you pay ACC levies based on your liable earnings. There are two components:

• Work levy — based on your industry classification and liable earnings. Trades are generally classified as higher-risk, so this levy is higher than office-based work.
• Working safer levy — a flat rate applied to all earners.

The work levy is a legitimate business expense and is tax-deductible. Make sure your ACC classification is correct — being misclassified in a higher-risk category than your actual work warrants can mean you are overpaying.

This is the single most common mistake we see from self-employed tradies: mixing personal and business money in the same account.

Open a separate business bank account from day one. Every business payment comes in, every business expense goes out. This makes your bookkeeping dramatically simpler, makes it easier to see how your business is actually performing, and makes your accountant's job (and therefore your bill) much smaller.

We use Xero across all our tradie clients. It connects directly to your bank account, categorises transactions automatically, and makes GST returns straightforward. You can invoice from your phone on the job site, track who owes you money, and see your financial position at any time.

For tradies who hate admin, Xero does not eliminate it — but it makes it significantly less painful.

Honestly? From the start.

Many tradies wait until they have a problem — a surprise tax bill, an IRD audit, a GST mess — before they engage an accountant. By then, fixing the problem costs more than getting it right from the beginning would have.

A good accountant does more than file your tax return. They help you choose the right structure, minimise your tax legally, plan for provisional tax, and make sure you are not leaving money on the table.

At Eastmure & Associates, we work with self-employed tradies and trade businesses across Christchurch, Canterbury, Selwyn, and Waimakariri. We offer fixed monthly fees so you always know what you are paying — no surprise invoices.

Book a free 30-minute consultation →

Eastmure & Associates are Christchurch accountants specialising in small business, trades, and medical professionals. We are Xero certified advisors and registered tax agents.