3rd February, 2022
End Of Financial Year is just around the corner. For business owners, that can mean a mad scramble to the finish line. Here are six things to address now in order to get ahead.
There’s nothing like a bit of a deadline pressure to really kick anxiety levels up a notch, and there’s no deadline quite like tax time for business owners (that’s 31 March for the majority of businesses, by the way).
Whether it’s your first year in a business or you’re an old hand, running around trying to find invoices or receipts and getting your accounts in order not only makes your life more difficult, it can cause unnecessary stress to your staff, too.
If this sounds all-too familiar, then 2022 is your year to turn things around.
By taking a close look at how you perform basic bookkeeping and accounting tasks in your business, you can make tax time less taxing for yourself and those around you.
With the arrival of Payday filing v2 at the start of this financial year, employers should be generating and sending an Employment Information (EI) return file with every pay run as well as a New and Departing Employees file whenever you lose or gain staff.
To make your life easier ahead of the final pay run of the year, take the time to check that whatever payroll reporting you’re performing matches the IRD’s records accessing your myIR portal.
If there are any discrepancies, first ascertain that your physical payment date falls within the Current PAYE Period. If it doesn’t, be sure to update the PAYE Period before checking again.
You can find out more on how to process Payday filing with MYOB on the relevant help page.
Any discrepancies in payroll reporting and Payday filing should be identified and discussed with a payroll expert well in advance of 31 March.
For comprehensive information on Payday filing v2 and more, visit the IRD website.
Keeping tabs on your inventory is important at all times, not just at EOFY, which is why it’s recommended you run stocktakes on a regular basis throughout the year.
But you’ll also need to report opening and closing stock value at tax time, requiring you to commit yourself to an EOFY stocktake close to the end of March.
Manually checking inventory can be slow and tedious, so set the time aside and get it sorted.
Taking stock of your inventory also gives you the opportunity to audit what is and isn’t working for you. Perhaps it’s time to retire a certain product or write off dead stock. In either case, putting some time into more efficient and effective stock keeping ahead of EOFY will set you up for a stronger start to FY2022-23.
It may also be a good time to consider the systems you’re using to complete these tasks. Using modern inventory management tools will also help reduce the administrative burden for stocktakes.
For a no-nonsense checklist on how to perform a thorough stocktake in your business, read our blog on the topic.
There are any number of deductions and claims made at tax time that could require you to provide records as a form of evidence to the IRD.
In the past, this meant rummaging through filing cabinets, car glove boxes and, perhaps, digging up shoeboxes filled with receipts from under your bed.
Accountants will frequently ask for mileage records and logbooks to help make motor vehicle expense claims, estimates of home office usage and lists of accounts receivable and payable in the case you’re using a cashbook without invoicing or bills payable functions.
You can see where we’re heading with this – modern, digital recordkeeping processes really take the hassle out of providing evidence for your tax time claims, and that means going beyond juggling paper and spreadsheets.
Acquiring a business management solution like MYOB puts all of these details at your accountant’s fingertips, with features like the Capture App allowing you to snap a photo of your documents and have them uploaded in an instant.
With cashflow being one of the most important factors of business health, getting on top of money in and out of your business come tax time is critical.
In essence, the more money you can bring in while paying off your outstanding bills – and remaining solvent – the better off your business will be for EOFY and the new financial year ahead.
Running debtors and creditors reports ahead of tax time will help you to stay on top of any errors in payments, as well as giving you a chance to follow up with outstanding accounts without the panic associated with a bad case of ‘last minutitis’.
When it comes to the year-end processing, reconciliations are going to be a big feature, and for first-time business owners, this can be incredibly daunting.
If you’ve not been through the process before, or if you’ve found running reconciliations particularly stressful in the past, now’s the time to get on top of these processes so that you can be confident that you know what you’re doing in time for the end of March.
The main things you’ll need to reconcile are any bank accounts associated with your business, your balance sheet, and GST.
Take the time now to refresh yourself on how to perform these actions for your business and seek advice from an accredited professional if you have any doubts whatsoever.
For more detail on the key EOFY dates you can set your watch by, MYOB has a handy tax time calendar covering all the major actions businesses will need to take.
Beyond that, taking time to consult closely with your bookkeeper as well as putting in time for a session or two with your accountant are also of utmost importance at this stage.
If for whatever reason you need to develop a relationship with a new advisor, start your search with our handy Find an Advisor directory.
Need more tips on running a smooth tax time for your business? MYOB and Digital Boost will be hosting a live presentation on getting the most from your software at EOFY on Monday 21 February at 10am NZT. Sign up via Digital Boost today or tune in via Facebook Live on the day.