What should we be doing as business owners before our Balance Dates or tax year-end, depending on what type of business we are in? There's no point in paying any more tax than necessary.
- If you have trading stock (unless it’s clearly not going to exceed $10,000 in value) do a stock-take. Even if you have a perpetual inventory system on your accounting software you still need to check it’s accurate. Make sure you identify and write-off any unsaleable items or stock worth less than cost.
- Write off any bed debts to get tax deductibility as the accounting entries must be made before 31 March or your Balance Date. It doesn’t mean you have to stop chasing.
- Review your fixed assets and identify and write-off any which you’ve disposed of or stopped using.
- Make sure you have everything to hand for your accountant, stock-take details, accounts receivable and payable, work-in-progress, year-end bank statements, any new loan or finance paperwork and use of home details in particular.
- Bring forward any planned expenditure to get tax deductibility early.
- If you have sufficient cash reserves and the customer or client won’t mind defer income by delaying jobs until after 1 April. Don’t, like a client of mine used to, just delay invoicing until the 1 April - it’s a bit obvious!
- Get your accountant to help you prepare some interim financials so you can take any necessary tax-saving steps or make sure you know your up-coming tax liabilities BEFORE the year-end.
- Trust resolutions allocating distributions to beneficiaries must be completed and signed within 12 months of the Balance Date.
- To pay dividends before the end of this income year you’ll need to pass the appropriate resolutions prior to 31 March or your Balance Date.
- Get a new accountant, one who is really interested and cares about your business, who doesn’t just focus on tax and year-end financials and who doesn't charge an arm and a leg!
If you’re not clear on anything or want to make sure you stay on the right side of the IRD just give me a ring at no cost on 021 225 NICK or email nick@abnr.co.nz.
