Scott Gardiner - MYOB New Zealand sales manager, business division
1. Take advantage of deductions, write-offs and rebates before March 31.
Contact your accountant to discuss the deductions, write-offs and rebates available to your business before 31 March. Discuss actions to scrap worthless stock, plant and equipment and review your asset register (which keeps track of your company equipment including items purchased, sold or disposed of).
2. Provide relevant information to your accountant or bookkeeper.
Once the previous step is completed, provide all necessary financial information to your accountant or bookkeeper. There are several options; for example, have them make a point-in-time copy from your data file in the cloud or provide them with a secure copy of your backed up files. Even better, invite them to your online data file. Check what best suits them.
3. Keep up to date with compliance changes.
Business owners have been granted something of a reprieve this year, with minimal compliance changes. The ACC earner levy threshold - the upper point at which the ACC earner levy doesn't get calculated - is rising from $118,191 to $120,070 from 1 April 2015.
There have also been changes related to payroll, which will affect some employees who have child support deductions. The changes will be introduced in two stages, from 1 April 2015 and from 1 April 2016, so ensure you have an up-to-date version of your payroll.
4. Print key payroll reports.
If you have employees and have been reviewing your payroll reports throughout the year, your records should be in great shape. However, it's always worth giving them a final once-over. Although you don't need to provide a summary to your employees, it's a good idea to give them Earning Certificates, as these can be used to check information provided by the Inland Revenue.
5. Finalise end of year adjustments.
Your accountant or bookkeeper may want to make a number of adjustments to your reports or accounts. Once changes have been updated, lock all accounts relating to that year so that data remains accurate. This will help ensure an easy transition into the new financial year. The great news is that with many online solutions, end of year updates can happen in real time. So there are no more delays in waiting to finalise your end of year.
6. Create a separate copy of your accounts and back it up.
Whether you're working on your accounts in the cloud or on your desktop, you should seriously consider making a point-in-time backup outside your accounting system that creates a data file for the 2014/2015 financial year only. Carefully save and store your 2014/2015 financial year file elsewhere in the cloud or offline.
7. Prepare for the new financial year.
The end of financial year is also a good time to reassess and tweak your business plan and ensure you're on the right path for next financial year. Also, take some time to review your accounting software and think about how your business can benefit from cloud accounting solutions. It's also a great opportunity to spend time reviewing progress of your business with your trusted advisers. Benchmarks, KPIs and performance to budgets are good topics of conversation to start the new financial year well.
Grant Anderson - Xero, head of accounting
1. Talk to your accountant before year end.
Start thinking and planning about tax early. If you are unsure about your particular circumstances, talk to your accountant - they will be able to give you specific advice for your situation. Any fees you pay them are deductible too.
2. Stay on top of your record keeping.
Use cloud-based accounting software, such as Xero, to stay on top of your financial position. 'The cloud' is a platform to make data and software accessible online anytime, anywhere, from any device. It's scalable, cost-effective and easy to use.
You can share Xero with your accountant, and you can both work on Xero at the same time. This helps your accountant to help you resolve problems as soon as they happen, rather than leaving them until the end of the financial year.
Remember that expenses you want to claim need to be supported by invoices or receipts. Taking photos and scanning your financial papers throughout the year will save a lot of time at the end and makes things easier for your accountant. And remember, it is a requirement to keep business financial records for seven years, so going paperless allows for easier storage. Another tip is to get an external hard drive to back up this information.
3. Claiming expenses.
It is important to know what expenses you can claim against your taxes, and what you can't. For instance, office supplies like printing and stationery costs are usually 100 percent claimable, but you can only claim a proportion of your home office costs. Your accountant is always the first person you should ask.
If you use your car for business, you can claim some of the costs. If you think more than 25 per cent of your travel is for business, you need to substantiate this with a logbook. If you travel less than 5000km per year, you can claim mileage based on your actual travel. Of course, you need to keep a record of the distances travelled and the purpose of the trips. IRD publish an approved mileage rate each year.
It is also possible to claim for depreciation of assets. Purchases over $500 that have a useful life of more than one year must be capitalised, not expensed. The capital cost is then written off over the asset's useful life. This is called depreciation. IR publishes a comprehensive list of the depreciation rates that apply to different assets.
4. Review fixed assets, inventory and receivables.
Review your list of fixed assets before balance date. Sell any surplus or unused assets that can be sold. Other surplus assets should be written off, along with any assets that have been thrown out or lost.
Review your inventory before balance date for out-of-date or obsolete items. Dispose of any unusable inventory before balance date. Any obsolete inventory can be written off to save you tax. Also , review your overdue receivables before the end of your financial year and write-off any bad debts.
5. Plan your expenditure.
To reduce your taxable income, purchase any upcoming expenses, like postage or printer ink, before 31 March in order to claim them as early as possible. Prepayments such as insurance can be claimed in full, as long as the total prepaid is less than $12,000.