Important dates and advice to help small businesses prepare for end of financial year

Posted on: 29 Aug 2024 at 10:23 pm
Do you want to avoid an extra headache when it comes to tax time this year? Sure you can! Plan ahead and you could save yourself lots of time, money, and anxiety when the fiscal year comes to an end on March 31, 2021. But where should you start? Organising important documents is a great start.Records-keeping is something every business needs to get up to speed on a daily basis, according to experts. Being organised from the get-go will reduce the amount of time that is needed when the time comes to create your tax return.

Utilizing intuitive accounting software and cloud storage like Google Drive or Dropbox – as well as tenancy management software like myRent.co.nz - could save businesses time.

For small businesses such as restaurants and retailers it is crucial to monitor stock levels when the close of the financial year draws near.

If you go to your accountant and can’t remember your stock level from a couple of months ago, that creates difficulties.

A good reminder for smaller business owners is that a temporary increase of the instant asset write-off during COVID-19 – from $500 up to $5,000 – will be increased back to $1,000 beginning 17 March 2021.

This change will have a big impact on small businesses.

Three important changes to 2021

Here are some other significant tax-related changes that took place recently or are on the agenda for 2021.

  1. Don’t forget that the minimum wage is set to increase by $1.10, taking it from $18.90 to $20 per hour as of 1 April 2021. This could impact your financial records and superannuation benefits.
  2. A new 39% personal tax rate will be imposed on income above $180,000. The new tax rate will be in effect starting on April 1st, 2021. Tachibana believes this is likely to affect those who earn income through personal services, instead of those who own the shares and make capital gains.
  3. Make sure you are aware that ACC Earners’ levy, that helps pay for the expenses associated with employee injuries, will remain at its level until 2022 in order to help businesses cope the financial burdens of COVID-19. As of January 20, 2021 the levy stood at $1.39 for every $100 (1.39%).

The fundamental elements of EOFY achievement

Here are some helpful guidelines and dates from professionals that small business owners might wish to consider to ensure their house is organized for tax season.

1. Finalise your accounts

  • Check and approve your bills, invoices and expense claims.
  • Monitor accounts that are due as well as outstanding transactions to get a view of the entire year.
  • Review the debtors’ accounts as of 31 March. Consider the possibility of writing off any bad debts in order to make them an expense at the end of the year.
  • List suppliers or clients who’ve been invoiced on or before 31 March or earlier but won’t be due until the end of April. You might want to consider treating these costs as 2020-21 costs.

2. Clean up and reconcile your files

  • Bank statements should be consolidated, income tax year-end records, sales, purchase and expense records.
  • Reconcile your bank accounts , and check they match the balances from your bank statements.
  • Make a profit and loss statement in order to determine how much annual profits your business earned.

3. Examine the information from your payroll vendor as well as Inland Revenue

  • Assess information obtained during EOFY to assess the current financial condition of your company.
  • Request your payroll provider to supply EOFY information as early as possible so that it can be reviewed.
  • Access Inland Revenue records, including PAYE tax responsibilities and any KiwiSaver requirements for the employees.

4. Manage superannuation

  • Change your employer’s superannuation tax (ESCT) rates*, with the tax rate varying for each employee based on their salary and length of employment.
  • Filing electronically, as required by law, if your company pays $50k or more in PAYE tax and ESCT.


*For KiwiSaver businesses, they have to pay ESCT on mandatory contribution from employers of up to 3 per cent but not on contributions deducted from the wages of employees.

5. Maximise your tax refunds

  • Track expenses and asset purchases in the course of the year, and the cost of improvements or maintenance in order to claim any refunds from EOFY.
  • Think about disposing of stock that is no longer needed since provisions for obsolete stock or write-downs on stock aren’t typically allowed as tax deductions.
  • It is recommended to pay within 63 days after 31 March to get an employee-related expense deduction such as bonuses, holiday pay, and long-service leave.
  • If your income is substantially higher than what you earned last year, think about making an additional provisional tax payment to ensure that your tax payment is aligned with turnover.

6. Keep business and personal finances Separately

You generally don’t get tax deductions for personal expenses; only company expenses. But you might be racking up unnecessary compliance costs in the event that your accountant needs to split up what’s tax deductible and what’s not.

Some key 2021 tax dates

  • 9 Feb 2021 - 2020 income tax due for those who do not have a tax professional.
  • 1 March 2021 GST return due and payment due by January for businesses filing every two months.
  • 30 March 2021 - 2020 income tax return due for tax agents (with an effective extension of time).
  • 1 April 2021 - the new financial year starts on the island of New Zealand.
  • 7 May 2021 - final installment of the tax proviso for the 2020 financial year and the last opportunity to make tax provisional voluntary payments.
  • 7 May 2021 Tax return for the year’s end and due payment.

Notice: Some dates may vary from the official deadline, such as when the due date occurs on a weekend, or a public holiday.

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