End of Financial Year – 31 March 2022
Many New Zealand businesses are the end of another financial year. We love to educate our clients (not just talk about tax payments due) so we’ve put together 8 tips to help you and your business close out FY22 in the best position. Sorry, no 5 minute abs.
Following these points will ensure you are well set up for the new year ahead and we’ll be ready to hit the ground running with you.
One. Close out the Previous Financial Year – Sign & File
First port of call, has your FY21 tax return been filed? Do you still have that annoying paperwork from your accountant sitting on your desk waiting to be signed? Before starting the new financial year, make sure the previous one is all taken care of.
The final payment for FY21 terminal tax is due 7 April. If cashflow is an issue, there are a variety of options to make it easier for you and your business. Talk to the Auctus team today to see how we can help.
Two. Business Plan / Cashflow / Budget / Goals – Get Clear
Where do you want your business to be in 12 months’ time? What are your goals for the year ahead? Do you have specific revenue and growth targets you are striving for? High performing businesses have detailed business plans and budgets/cashflows that they constantly track their performance against. We are no different, Auctus have just set our business plan and budgets for the year ahead too and would love to help you and your team formulate your own.
Three. Write off Bad Debts
We all know the last couple of years have been tough for a lot of businesses. Have a look at your accounts receivable list, are there some debts on there that are older than 6 months, older than one year? Is it likely that these funds will be collected? If not, you can write these off as bad debts and claim a deduction for these if written off before 31 March. This doesn’t mean you can’t still collect the cash later down the track, if you do you just reverse the bad debt deduction claimed and return as income.
Four. Stocktake/ Work in Progress – Put a Number On It
Do you have physical stock that you sell to your customers OR Do you have large projects that span multiple months and you either bill periodically or at the end of the project? If so, you will need to track your stock levels or work in progress at year end.
1. Set aside some time on 31 March to do a stocktake of materials onsite or review your work in progress calculations.
2. Do you have any stock that has been damaged or is now obsolete? Make a note of this in your final stocktake and we can write this off in the FY22 financial year.
Can you improve? Are you manually tracking your stock? April is a good time to speak to the team at Auctus about cloud-based inventory management systems and how these can save you time, money, and energy.
Five. Fixed Assets – Clean Up
Look through your fixed asset schedule, are there any items that are now obsolete, or you no longer own. Highlight these and let the Auctus team know, and we can ensure these are written off and the deduction claimed in your year end accounts. Old office equipment, furniture, vehicles, buildings?
Six. How’s the Shareholder Current Account looking?
Is your shareholder current account looking a bit unhealthy? Have you taken significant drawings out of the business during the year? Talk to the Auctus team today about declaring a dividend prior to 31 March to avoid any pesky interest charges on the overdrawn current account.
Seven. Staff Bonus Payments?
Did you know that you can claim a deduction for any bonus payments (bonuses, long service leave and holiday pay) that are paid within 63 days of balance date if they relate to the 31 March financial year? This is a great way to recognise the amazing job your team has done this year whilst ensuring you maximise your tax deduction. We can help structure your team bonus scheme.
Eight. Higher Income?
Have you smashed it out of the park in FY22? Is your income significantly higher than the previous year? If so, (awesome!) talk to your relationship manager at Auctus today to ensure everything is on track for the upcoming provisional tax payment on 7 May, stay ahead of the curve with no surprises.
Its all learning
The last couple of years in business have seen kiwis through plenty of turbulence. For many, it has pointed out how important it is to have financials up to date. Whereas some of you saw the adverse effect of not keeping records up to date. Make sure you take time to reflect on what worked well and what didn’t so that you can carry the learnings forward.
Auctus want you to hold confidence with your financials and keep moving forward without delays. Financial health is key to reaching your goals faster. Seeing you succeed not suffer in your business journey is our goal and we look forward to the new financial year with you.
Auctus are chartered accountants who are on a mission to help your business grow, and to reach its full potential.