Any Time Is The Perfect Time To Plan For End Of Financial Year
End of financial year!
These 4 words don’t exactly inspire you to celebrate or party.
It’s ok, you can tell us that you don’t really like tax time. We won’t be offended!
We also won’t judge you when you admit that you put off those end of year tasks.
But, trust us when we say that it is better to start sorting everything now, rather than trying to cram all the jobs into the small window of time between 31st March and the IRD due date!
End of financial year always comes with tax requirements. And it’s also a great time to review your business in general, see where things are heading, and make plans for the next financial year. To do all of that, you are going to need accurate figures.
And, this year end could look a little different if your business was impacted by Covid.
So, are you ready for EOFY? Let’s make sure you are by ticking off these essential tasks:
Get Up To Date
Whether it’s 2nd April or 28th March, it’s the perfect time to get your records up to date. Even though you will usually have more information to add before the very end of the financial year, you can still get as up to date as possible now.
Cloud-based accounting makes it really easy to find all the information you need for your EOFY reports. Go through your Xero records, stock-taking and payroll software and make sure everything is up to date.
And if you are one of those people who likes to hoard receipts in strange places or you haven’t reconciled a Xero transaction ever, then now is the time to start sorting everything out, ensuring your bookkeeper or accountant have everything they need.
Check The Comings and Goings
Regardless of your record keeping, there will have been plenty of comings and going within your business this year. So, make sure you have accurately recorded all of your income and outgoings. Don’t forget about new equipment, depreciation figures and expenses as all of these can impact your tax position.
If you run a business that holds stock, you will need to do a stocktake and see what stock you currently have on hand. Consider if you are going to carry it over to the new financial year or whether you need to sell it now.
Finally, if you have employees, make sure all of your payroll records are up to date. Check that you have paid them correctly, that their sick leave and holiday entitlements are recorded correctly, and that you have correctly accounted for PAYE and Kiwisaver payments.
By looking at these things in advance of March 31st, you’ll have plenty of time to deal with any issues including selling excess stock and sorting out debt.
If you pay provisional tax and your income looks like it will be higher than anticipated, you may wish to make an extra voluntary payment to avoid IRD interest charges.
Sound a bit confusing? That’s alright, we have you covered. Reach out to your accountant or bookkeeper now and they can let you know what information they need to get your records in order.
Has Covid Reared Its Ugly Head?
EOFY is usually enough of a challenge in itself. But, this year, there is a whole new element to consider. We’ve been dealing with the Covid-climate for a couple of years but it may still be causing problems for your business.
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.
It could mean that you have over or underestimated your tax obligations, and your final figures might need adjusting. If things aren’t looking as well as you’d hoped, you could potentially utilise the government’s tax carry back scheme which allows you to carry any losses back to the preceding income year.
You can still carry the loss forward if that is the best option for your business and your accountant will be able to provide you advice around this. You can also ensure you are able to meet your tax obligations by organising an instalment agreement with the IRD or potentially applying for a partial or total write-off due to serious hardship.
Wage Subsidies And Resurgence Payments
The government introduced financial support payments became a welcome boost for many businesses. If you accessed the Wage Subsidy, Resurgence Support Payment or Leave Support payment, you need to make sure you have accurate records of what you received and what it was used for.
Again, your accountant can provide support and guidance on how to account for any of these if you get stuck.
Help Is Always Available
Sometimes accounting can seem like a foreign language. Especially with all those tax terms and end of year report names! Luckily, the Figuration team are here to be your accounting dictionary.
We take care of the numbers (and the tricky terminology) so that you don’t have to!
Chat with our team today and we can guide you through getting ready for EOFY at any time of the year!