It's ok to admit that the end of the financial year isn't your favourite date on the calendar.
And it’s also OK to admit that you might be putting off getting everything sorted out.
But, trust us, starting now and getting things together is much less stressful than running around on the 30th of March not knowing where any of your receipts are.
As well as the tax aspect, the end of the financial year is also a great time to review your business in general, see where things are heading and make plans for the next financial year. You can't do that without accurate figures either.
Plus, this end of financial year could look a little bit different if you have Covid support payments to account for.
So, with that in mind, here are a few things you can get started on to make sure you are ready for EOFY this year.
Get Your Records Up To Date
Even though you will likely have some information to add before the very end of the financial year, you can still get your records mostly up to date now.
By using cloud-based accounting, stock-taking or payroll systems, then the chances are most of your information for your tax return of EOFY reports is right where you need it.
However, if you are one of those people who have not reconciled a Xero transaction since last financial year, or still like to tuck receipts in shoeboxes, pockets, your vehicle's glove box or anywhere else, now's the time to start sorting it all out.
Check The Ins And Outs Of Your Business
Make sure you've accurately recorded any income and outgoings, new equipment or depreciation figures and expenses - all those things can affect your tax liability.
Depending on the type of business you run, you might have stock leftover that needs dealing with before the end of the financial year. Consider whether you can carry it over or whether you need to get it sold.
And finally, if you have staff, make sure all their details are up to date. Have you paid them properly? Is their sick leave and holiday entitlement and pay all correct? Have you made the correct PAYE and KiwiSaver payments?
Getting all this done now gives you time to deal with any issues that might arise - like selling off extra stock, sorting out debt or thinking about whether you can afford to delay sending some invoices or making purchases.
If you pay provisional tax and your income looks like it will be higher than anticipated, you will also have time to make an extra voluntary payment if you wish.
If this all sounds like we are speaking in a foreign language, then reach out to your accountant now and find out what they need from you. Often, it’s a case of ensuring they have the info on what’s taken place in your business this year and they can handle the rest!
Has Your Business Been Affected By Covid-19 This Year?
It has been a difficult couple of years dealing with the Covid-climate and all it brings with it. Unfortunately, Covid-19 is still with us and is still causing problems for many businesses.
Your profits may be very different to what you were expecting at the beginning of the year, depending on how much your trade has been affected. If you have been forced to reduce trading or close for extended periods, you may even be looking at a loss.
This may mean you have over or underestimated your tax liability, and your final amount will need adjusting. You may also find that you can utilise the government introduced tax carry back scheme that allows you to carry any losses back a year to the preceding income year.
Of course, you can still carry the loss forward. And if you are worried about meeting your tax obligations, you can create an instalment agreement with the IRD or potentially apply for a partial or total write-off due to serious hardship.
Again, this is something that your accountant can advise on and help you apply for if necessary.
Subsidies And Resurgence Payments
You may also have accessed some of the Government subsidies for businesses, such as the Resurgence Support Payment or Leave Support Payment. You need to make sure you have accurate records of how much you received and what it was used for.
Here’s info on the main ones:
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Wage Subsidies: Depending on whether you are an employer, sole trader, shareholder employee or partner will dictate how you need to account for the wage subsidy. Regardless of your status, it all needs to be accounted for, but in some instances it is considered taxable income or will have ACC levies applied.
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Resurgence Support Payments: If these payments were used for covering business expenses then they don't need to be included in your tax return and you can’t claim deductions for those expenses. However, you will need to account for them in your GST return and can claim GST for any items purchased using the RSP.
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Small Business Loan: As this is a loan, it is not considered income, so will not be taxed. There is also no tax deductions for the repayments. But, it is important that it is coded correctly in Xero to ensure your data is accurate.
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If you aren’t sure how to account for any of these, then your accountant will be able to provide support and guidance.
Need Some Help Getting Those Accounts In Order?
At Wise Advice, we know that just because we love numbers, it doesn't mean everyone does. So, we're here to help you get those numbers in the correct columns and adding up properly.
You can get started on your end of financial year prep by downloading our Annual Accounts Checklist. This is the first step in making sure you have everything you need for your end of year figures.
Your next step is to book a time to speak with one of our team if you need more help. One of our expert team will help guide you through what you need to do to ensure your accounts are correct.
If you'd like to make it really easy and you are in the hospitality sector, offer professional services or run an e-commerce business, then our specialist accountants can do the hard work for you.
Grab the Annual Accounts Checklist here.
