Year End – Important Reminders

As we hit the end of another financial year, it’s timely to review what is required for the smooth preparation of your accounts and tax returns.

Here’s a checklist of some key items to keep in mind:

  • Debtors/Creditors: Compile a list of amounts owed to you (invoices issued but not yet received) and amounts you owe (invoices received but not yet paid) at the end of your financial year.
  • Holiday Pay: It is important to run off the record of any holidays and alternate leave owed to your employees at your balance date. Many payroll systems do not allow you retrospectively access what was outstanding at say 31st March, so it’s important to do this as close to year end as possible. Also you are able to claim leave paid to staff within 63 days of your balance date, so please keep track of these.
  • Bad Debts: Review outstanding debts and write off those unlikely to be recovered. To claim a tax deduction, bad debts must be formally written off before the end of the financial year. Ensure you maintain adequate records to show these write-offs in the event of an IRD inquiry. Note that writing off a bad debt does not mean you have to stop trying to collect it but you must have taken all “reasonable” steps to collect it prior to writing off.
  • Stock on Hand: Conduct and provide us the details of a stock take from the last day of the financial year. While certain industries may have specific provisions for valuing stock, typically, commercial stock is valued at the lower of cost or net realisable value (i.e., sale price). Ensure your stock values are GST exclusive and backed by thorough records. Also note that if your overall stock value is below $10,000, an estimation of stock on hand is satisfactory. For farming clients, it’s necessary to document livestock tallies and bought-in feed on hand exceeding $58,000 at the year’s end.
  • Timing of Transactions: Assess the timing of significant transactions and their impact on your profit for the year. For instance, selling assets after balance date rather than before could defer any depreciation recovered.
  • Large asset sales or purchases: If you have sold or purchased any significant assets throughout the year, please note these down and ensure you have invoices available as we are likely to require these. This includes property purchases or sales, vehicles, or even larger tool purchases. If you use software such as XERO, you may be able to link the invoice to the transaction so that we can easily access; we find this incredibly useful.

Remember, we’re here to support you every step of the way. If you have any questions or concerns about the year-end processes outlined above, please do not hesitate to reach out to us directly.