Against personal assets being up for grabs if the business fails from creditors.
the business is a hairdressing business, providing a service. What creditors are there? It is bad advice to set up an LLC - the benefits are greatly outweighed by the costs and admin effort required. There are thousands of sole traders successfully operating in NZ.
Are you leasing premises? Do your premises have neighbors either side? Are you employing others? Are you signing agreements with suppliers? All could be considered exposure to risk of some sort. Risk needs to be managed.
There is no hard and fast rule for structures. Your accountant will advise you based on your specific circumstances and make a suggestion from there.