How to Prepare for the End of Financial year: Your Essential Guide
If you run a business, you might be thinking “Oh dear, it’s almost year-end, I need to keep things under control and start preparing now”. You are absolutely right, no one wants to discover an unpleasant surprise at the end of the financial year. Here is the essential guide on how to reduce your tax payments this year.
- Your assets
The list of assets is one of the first things you need to check to make sure it is up to date. Everything that you are not using in business anymore needs to be removed to be able to get a tax deduction.
We manage 90% of our clients’ fixed asset registers so this is an advantage to them as they can ask us for a list and go through this. Any client of ours will have this service provided.
- Your Debtors
If someone owes you money they are your debtor. It is good practice to follow up on old invoices and touch base with the client to see if they are in a position to pay the bill or if you need to put them into debt collection. If you feel that this is bad debt and you will never be paid then it should be written off after honest attempts to collect these debts.
How does this help with reducing your tax payments? This will bring your income figures down and, hence, will reduce your tax bill. However, it is better to try to recover these on an ongoing basis throughout the year. We can do this for you and you will find that a prod from your accountant is sometimes all that is needed.
- Your Creditors
Recording your liabilities correctly at all times can reduce your tax bill. If you took out a business loan last year due to Covid-19, make sure you have the numbers right. However, if you are a managed client of ours already, you can sit back and relax as we do all your bookkeeping, so your Debtors creditors bank, and Assets should be up to date as a matter of course.
- Purchasing assets
We do not advise purchasing assets solely for the purpose of reducing your tax. Instead, you need to consider if the money is well spent so that it will create more revenue.
- Your vehicle
What we often see in small and medium-size businesses is vehicles being used for both private and business purposes. Unless your logbook is up to date, you can only claim 25% as an expense. Having the numbers and records right can reduce your tax payments at the end of the financial year.
- Your accountant
As we are registered Tax Agents, enjoy the benefits of time extensions on Tax return filing when you sign up with us. Tax compliance may sound complicated. Lean on us to complete and file your annual tax return with the IRD in a timely manner. We’ll complete a complimentary annual review when your tax return has been completed. We also monitor and remind you of your provisional tax installments and review your income prior to each installment due date so we can adjust if necessary.
Thinking ahead…
Excel spreadsheets used to be great but trust us, it is time to get a good accounting system like Xero to keep track of everything in one place. Xero is user-friendly accounting software, which makes the life of the business owners much easier making them wonder why they had been using excel for so long. We provide full Xero setup and support.
Conducting competitive analysis and price research every year is a fantastic idea. It helps you to stay up to date with the recent trends in the industry, see what happens with your competitors and how your product or services are positioned on the market.
At Spectrum Accounting we can get your tax done as soon as possible so that we can find out where our business has gone over the last year. You can focus on running your business and planning ahead.
We have helped a large number of businesses with bookkeeping and tax services. Our clients say that working with Spectrum Accounting is like finding a business best friend. We’ll work hard to make you wonder how you ever lived without us. Get in touch with us today to see how we can bring a meaningful difference to you and your business. We are based on the North Shore, Birkdale in Auckland but more than happy to look after your business no matter where you are.