Help us to help you

How you can help us to be more efficient with producing your end of year accounts and tax returns – so we can keep the costs down for you?

We understand that most people only have their accounts and tax returns done because they have to; it’s not a favourite expense of the business and you often don’t understand the time and cost it takes.

There’s a certain amount of work we just have to do in preparing your annual accounts and tax returns. I spelt some of it out in my last blog.

It is possible for you to help make this process more efficient, therefore quicker and cheaper.

We send you a checklist with a list of the information we require. Most of this is around compiling the working paper file to support your balances.

  • Make sure your bank reconciles to your accounting system. If you prepare a spread sheet cashbook and the totals don’t agree to the bank statement, we have to go through and find the difference. Even in straight forward systems like Xero there can be items that sit as unreconciled in the bank account. Check the bank reconciliation report. If you need help fixing these up, we’re happy to give you some training.
  • The same applies to any other operating systems you use. For example a stock system or fixed asset system. It needs to agree to your accounting system, or we have to find the difference.
  • Provide bank statements as at the balance date, for all bank accounts, credit cards and bank loans.
  • If you only keep cash records through the year we need to pick up all amounts owing to you and by you at the end of the year, provide us with a list.
  • Take a physical stocktake at balance date. If you have a computerised stock system, compare the totals. It’s the cost of that stock we’re after, not your selling price.
  • If you’ve had any unusual transactions bring them to our attention and provide supporting documentation.
  • Provide copies of all invoices requested. Generally this is around being able to prove the cost of an asset, or why an expense in repairs and maintenance or computer expenses is not a fixed asset. It also helps make sure we list the asset correctly on your asset list and claim as much depreciation as we can.
  • Provide details of any loans or hire purchases taken out during the year.

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A few things to remember as we head towards 31 March.

For most NZ businesses and people it’s the end of the financial year. Time to draw a line in the sand and total up how your business has gone for the last year, or how much income you have made and file another tax return. There are a few things to remember as we head to the 31st of March:

Stock takes need to be done –
For all businesses carrying more than $5,000 of stock we need to record the closing stock balance at 31 March, at its cost (or net realisable value).

You should do a physical count of all stock; if you keep a computerised stock system you should still do a physical count and compare it to your computerised records. Dispose of any obsolete stock so we don’t have to include it.

Write off any bad debtors
– in order not to have to include bad debtors in your accounts, and pay tax on them, you should write off any bad debts prior to 31 March. It doesn’t mean you have to stop chasing the debt, but you do have to write them off your normal debtor’s ledger.

Keep copies of all bank statements, loan statements and Interest & Dividend statements
that arrive in the coming weeks to give us poof of the balances at 31 March.

Are you likely to have tax to pay?
I’ve had a few clients contact me and ask this question, not only are they really busy but money’s sticking to the sides too. (Yeah finally!) So they’re thinking that a tax bill may be coming. And of course there may be the double whammy of having to pay tax on an increase in profits in the 2015 year and then the increase in provisional tax on the anticipated income for the 2016 year.

Also, remember that for a company, or a Trust or a high earning individual IRD charge interest on your tax. Clients hate paying the IRD interest. So even though the tax isn’t due yet it may be sensible to make some voluntary payments to keep the interest to a minimum.

Even if you choose to only pay when it’s due, it really pays to be aware that the bill is coming. Make it a financing decision, rather than a shock. There’s nothing worse than when a client gets a shock at their tax bill, or they’ve spent all the money! Give us a call if you think you’re business has been doing better than previous years, you’ve got cash in the bank or been able to buy expensive assets or repay debt. We can look at your management accounts and tell you what to expect, we don’t have to wait until your end of year accounts are done.

What is it we do for your end of year accounts? Why do you have to have them?

It’s coming up to the end of the financial year for most of our clients. That means we start another annual cycle of preparing the financial reports and tax returns for our clients.

You might wonder why you have to have this done.

It’s called compliance for a reason. There are laws that say you have to prepare annual accounts.

The Companies Act and the Financial Reporting Act 2013 state that a company has to provide its shareholders with an annual report every year. These need to be prepared in accordance with Generally Accepted Accounting Practice (GAAP) and include all the things that Clayton spelled out in his blog “Will you still need to prepare Financial Statements?”

It’s also an obligation under the Income Tax Laws to file an annual Income Tax return for the year ended on the businesses Balance Date. Fortunately these two things tie together and can be done at the same time. Read More »