13th February, 2024
EOFY for first time business owners can be a particularly stressful time.
But you don’t have to feel like you’re lost in the wilderness. We’re going to cover everything you need to set off in the right direction.
End of Financial Year. EOFY. It’s a topic that tends to get spoken about quite a bit over the course of one or two months each year, but why is it so important?
EOFY can mean different things to different people, but understanding what it means for you in terms of your obligations to Inland Revenue (IR) is critical for staying on the right side of the law.
For the new business owner, EOFY means the first time all your financial activities are due to be submitted for IR scrutiny.
This means collecting invoices, receipts, bills, payslips and whatever else exists on the paper trail of your fledgling organisation.
Your process for this should include a tax agent. Nobody expects first-time business owners to understand all the relevant tax legislation well enough to get things right on their first time through.
Given it’s your first EOFY, we highly recommend you consult a qualified advisor.
Whether you’re a sole trader looking for simple accounting software or a growing business in need of powerful management solutions, you can do it all in one place with MYOB.
Beyond that, here are some important tips and resources for you to consider as we moved towards this busy time of year:
The New Zealand income tax year starts on 1 April 2024 and will run through to 31 March 2025
EOFY for first time business owners means it’s essential to keep records up to date throughout the financial year.
Not only does this give you a real-time view of the business incomings and outgoings throughout the year, it means you by the time the tax year rolls round, you’ll easily be able to work out your business and personal income tax owed as well as the provisional tax due for next year.
Working out how much tax you owe can seem like a daunting prospect but there are partners and accountants out there to help you.
If you’d prefer to just do it yourself, there are some intuitive tools also and IR has created a range of calculators to simplify this process.
MYOB gives you automated tax processes, so you get more time to concentrate on your business.
You can claim back any purchases you’ve made throughout there year. This can include bigger costs like rent, power and internet for any home office space you’ve used to work from, travel for business purposes, office equipment to smaller items like office consumables, fuel and or anything you’ve personally paid for that went towards running your business.
Just remember: it’s against the law to claim back any personal expenses against your business.
Also, capital expenses are calculated by depreciation. For more information on this and how much you can claim check out Inland Revenue’s depreciation guide.
There could be write-offs, deductions and rebates that apply to your business. To find out, talk to your accountant before 31 March.
It’s important to check your stock for anything that is damaged or that you can’t sell because you may be able to write it off.
Having all your business data in one place can be risky.
There are many stories of businesses who have lost all of their information due to fire or hard drive corruption. IR may not be sympathetic to poor filing system excuses. They want to see seven years of customer data and if you aren’t able to present this, you can be fined.
Always have a backup regardless if you’re working on the cloud or from your local computer drive. That way, if the worst should happen, you’ll be able to reinstate a recent copy of your information, which’ll save more than a few headaches.
For starters, it provides a file depository to save all your invoices, receipts, time and wage records, asset registers and depreciation schedules. It helps you manage bills due and outstanding debtors.
MYOB automates PAYE management, so you can say goodbye to messy manual admin at EOFY.
It also tracks your goods and service, income and provisional tax exposure and Kiwisaver and PAYE liability. Best of all, this software gives you a clear picture of cashflow, profit and loss and balance sheet in real time.
Setting yourself set up with accounting and payroll software (if you are an employer) can take a lot of the stress of EOFY away. And of course, help you keep your finger on the performance of your business for the rest of the year too.
What do you want to achieve with your business? How do you plan to get there? Are you tracking results? If so, what are your results telling you and are you acting on them?
EOFY is also a great time to take stock and look at your business plan. Do you need to change anything up to make sure you get off to a flying start in the new year?
Once you’re done, take a beat, reflect, then get ready and excited about the financial year ahead. Bring it on.
Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
MYOB is not a registered entity pursuant to the Tax Administration Act 1994 Agent Services Act 2009 (TASA) and therefore cannot provide taxation advice to clients. If you have a query concerning taxation including filing your BASGST return or annual tax statements then you should consult with your accountant or other registered tax adviser.