Time to conquer financial year end
Take a deep breath, block out your diary because it’s time to get your annual accounts conquered and done. The same rules pretty much apply year on year so let’s do a recap of the must-haves so you aren’t pulling your hair out with frustration.
Review your debtors. If you have bad debts, write them off before you get to 31 March or you’ll have to
include the amount owing to you in your sales for the year.
To write off the debt you must have taken reasonable steps to attempt to recover the amount owing.
Remember none of the above actions prevent you from continuing to try to collect the debt so keep chasing to recover any money owing.
Money owing by you at the end of the year (accounts payable or sundry creditors) needs to be listed.
This is so we can claim the expenditure for tax purposes.
If you have invoicing to do in April for work done in March, remember these sales belong to the past financial year and must be included in your accounts receivable (sundry debtors).
Stock take - If you have to count stock, think about how you can minimise the effort at balance date.
Can you get rid of obsolete stock? Have you organised people to count the stock? Note: To claim a deduction for obsoletes or slow moving stock, it should be disposed of before March 31.
Fixed assets - Review your fixed asset schedule. Are there any fixed assets that have been scrapped?
You could claim a deduction for their remaining adjusted tax value. You no longer have to apply to the IRD to write off these assets, so long as you or an associate do not intend to use them for a business purpose in the future.
Sales and Purchases - Examine significant intended sales and purchases to see which side of the balance date they should be made, that is assessable/deductible this year or the next. Some people think if they change their motor vehicle before balance date, it could save tax. It’s probably better to make your decision based on good business rather than on tax.
Work in progress - If you have projects partway through these need to be valued at 31st March. Also review the costs incurred to date.