{"id":785,"date":"2022-03-16T12:01:47","date_gmt":"2022-03-15T23:01:47","guid":{"rendered":"https:\/\/marketingwebsite.afirmo.com\/nz\/?p=785"},"modified":"2023-05-25T16:03:48","modified_gmt":"2023-05-25T04:03:48","slug":"preparing-end-of-financial-year-accounts-for-small-business-owners","status":"publish","type":"post","link":"https:\/\/www.afirmo.com\/nz\/resources\/preparing-end-of-financial-year-accounts-for-small-business-owners\/","title":{"rendered":"Preparing end of financial year accounts \u2013 for small business owners"},"content":{"rendered":"

What financial records should a small business keep and why?<\/b><\/h2>\n

Creating a checklist of what you\u2019ll need to have done by 31 March can help you work steadily towards completing tasks on time and avoid last minute panics over things you missed. Many of the tasks can also provide valuable insights into how things are going throughout the year. Accounting software can be a big help here.<\/span><\/p>\n

Assets:<\/b> Keep a track of asset purchases, improvements and disposals as you go, so you can quickly calculate depreciation expense claims. This might include repaying some of the tax on depreciation previously claimed if an asset is sold for more than its depreciated (book) value in your accounts.<\/span><\/p>\n

Debtors and creditors:<\/b> Keeping track of what you are owed and your upcoming expenses makes it easier to monitor your cash flow. You can chase up overdue accounts to get your money sooner and avoid penalties for bills you haven\u2019t paid on time. It simply means keeping your accounting up-to-date through a \u201clittle and often\u201d approach, rather than through massive catch-up sessions a few times a year.<\/span><\/p>\n

Profit and loss:<\/b> Keeping track of your income and expenses is not only required for tax records, but also provides an up-to-date picture of how your business is doing. If you allocate amounts to accounting categories, you can easily identify changes from average historic values. Profit and loss statements can also help you determine monthly sales targets and adjust pricing.<\/span><\/p>\n

Employee wage records: <\/b>Wage records need to be kept for every employee. They must include things like total earnings and taxable allowances, PAYE deducted, deductions for child support and student loan, KiwiSaver deductions and contributions, and more.\u00a0<\/span><\/p>\n

GST records:<\/b> If you\u2019re registered for GST<\/a>, you must keep records of all GST collected through sales and paid out through business-related expenses. Some suppliers may not charge GST, so be sure to check their invoices or receipts before claiming, particularly for overseas goods or online services. Keeping track of GST helps you manage your cash flow and prevent unexpected payments to Inland Revenue.<\/span><\/p>\n

Stock take:<\/b> As near to the end of the financial year as you can, identify the stock you have on hand. This lets you revalue stock or identify obsolete or damaged stock to be written off, both of which can affect your tax bill.<\/span><\/p>\n

To learn more, visit the Inland Revenue website for details on their required <\/span>record keeping<\/span><\/a>.<\/span><\/p>\n

What expenses can be tax deductible for a small business?<\/b><\/h2>\n

Claiming an expense means you deduct, (subtract), its cost from your income to reduce the amount of income you have to pay tax on. If you\u2019re registered for GST, you can also claim the GST component<\/a> of your expenses. You must keep verifiable records of course, for at least seven years, in case your accounts are audited by Inland Revenue.<\/span><\/p>\n

In general, you can claim any expense that\u2019s required to produce your taxable income. Here are some examples to get you started:<\/span><\/p>\n