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.