A guide for the end of the financial year in New Zealand

As the end of the financial year approaches, business owners in New Zealand prepare to close the books. In this guide, we break down everything you need to know on navigating EOFY, including key dates, preparation tips, and strategies to stay organised.​

The end of the financial year in New Zealand is on March 31st. It’s an important time for many of us, with many responsibilities to keep in mind as 12 months of financial activity comes to a close. It is also a good time to reflect on our financial situation, review our expenses and revenue, and plan for the year ahead.​

There are many deadlines for various tax-related activities, such as the filing and payment of tax returns. As these deadlines draw near, it’s important to stay on top of your finances to ensure a smooth transition into the new financial year.​

The financial year in New Zealand is different from the calendar year, running from 1st of April to 31st of March the following year. If you are a business owner, this provides an opportunity to review your financial performance, plan for the future, and ensure compliance with your tax obligations.​

Tax compliance is a crucial aspect of EOFY, as you must file your annual income tax returns and pay any outstanding income taxes before the deadline. Financial reports are necessary for maintaining a clear and accurate understanding of your past year (both of which are made easier by efficient business management). It’s also a good time to review and update your insurance coverage, so your business is properly protected from any unforeseen events.​

It’s important to note the end of the financial year is not the only deadline for businesses. For business owners who file income tax returns themselves, the deadline is the 7th of July. However, if you are working with an accountant (such as Beany), you may be eligible for an extension of time (EOT). The deadline for filing with an EOT is the 31st of March the following year.​

It's important to check with the IRD to confirm the eligibility for the EOT, as not all businesses will qualify. There are many things to be aware of throughout the financial year - our key tax year dates calendar provides a comprehensive list of key dates, so you can keep on top of your compliance and reporting responsibilities. The IRD has more information on filing your tax return if you're interested in knowing more.​

There’s a lot to keep in mind during the end of the financial year. To make things easier, we have created a checklist to make sure your EOFY process goes smoothly. Using this as a reference will also help you prepare for the next financial year.​

Accountants help make sense of your finances and prepare your accounts and tax returns at the end of the financial year. You’ll want to ensure you are paying the right amount of tax, have an idea of the size of your bill and when you need to pay it, as early as possible.​​

If you’re concerned about fees for accounting services, here are two tips:​​

Don’t underestimate the difference to your overall tax position that an accountant can deliver!​ ​

Read more: How to find the right small business accountants​

Go through your debtors (people who owe you money) before the end of the financial year. If you’re sure they are a bad debt and will never pay you, write them off now. You don’t want to pay tax on income you’re unlikely to receive.​​

Go through your list of assets (fixed asset register) and make sure that you have, and are using, every asset listed. Pay particular attention to electronic devices that you may have since upgraded.​​​

You’ll probably find items that are no longer used, have been thrown away, stolen, or sold, or traded in for an upgrade.​​​

Write them off now and take the tax deduction. ​

Read more: 7 top tips business owners should know to reduce your tax bill.​​

Is your vehicle logbook up to date – recording all business and personal kilometres for at least 90 days? Without a logbook determining your business/private use, you are restricted to 25% claim for expenses, which can make a big difference at year-end.​​​

The information from the logbook can be used for up to three years provided there are no significant changes in the vehicle’s use. ​

If you’re interested in this topic, we have an in-depth blog on business vehicles.​

Make sure that you are carefully recording all your creditors (people the business owes money to).​ Recording all liabilities accurately can reduce your tax bill.​​

Think seriously about using a bookkeeper in the new financial year. If you’re not confident about what goes where, or are as time-poor as most business people, then a bookkeeper can help input information into your system correctly. You may be surprised how little it can cost – what takes you four hours may take a bookkeeper only two. It will certainly free up your time to do something more enjoyable. Do some research online or ask your colleagues/mates – there is no shortage of good people out there.​​

Beany offers bookkeeping services so you can focus on running and growing your business.​​

Read more: How to make bookkeeping as stress-free as possible​

Using an accounting software package that does what you need is vital to businesses. If you haven’t updated for a while, or are new to business, you’ll be astonished at what’s available these days. The start of a new financial year is the perfect time to switch to an accounting software, such as Xero.​

Read more: 7 ways to enrich your business with Xero accounting software​

Do you need all those entities and tax structures? Maybe you need two companies and three trusts – maybe you don’t, or maybe you need to restructure from a sole trader to a company.​

Although there are short–term costs to close these down, it is well worth it to stop ongoing compliance costs. Talk to your accountant to discuss your situation.​

Read more: Business structures - what is best for you?​​

New or upgraded business software seems to be available every day – is there anything you can automate to save time and money? Can your apps be integrated into your accounting system, or with each other?​​

Colleagues and friends may provide useful nuggets of information.​​

Business can get complicated and when it does, accounting records and systems often follow suit.​​

If you’re adding complexity – which will, inevitably, add cost – then make sure you’re getting a good return. Sometimes it’s worth it, sometimes it’s not.​​

Digitise all important paper documents and save them, along with your relevant electronic documents, in an orderly way. Key documents to save include:​​

Ideally, you’d save them to your accounting system, but there are alternative solutions. It’s also helpful if you add detailed descriptions on the transactions – your accountant will appreciate it!​

As the end of the financial year approaches, it's important to review how the past 12 months have been for your business. This is an opportunity to review how your business performed and assess how you’re tracking with your goals. This analysis will help for the coming year, as you set budgets and identify areas for growth.​

A good way to assess your financial performance is to look for any trends in your revenue and expenses. Maintaining proper budgeting and cash flow is important when setting financial goals for the coming year, as it allows you to identify areas where you can cut costs, prioritise expenses, and make informed decisions about where to allocate resources in order to achieve your goals.​

You should also assess the resources you need for the coming year, such as staff and equipment, and incorporate this into your forecast. Seeking professional help from an accountant can be beneficial here - we offer a range of services to take the weight of accounting off your shoulders.​

The end of the financial year can be a complex and time-consuming process for businesses. However, by reviewing your financial performance over the previous year, setting realistic financial goals, and updating your business plan, you can navigate this period with ease.​

We understand the importance of the end of the financial year, and are here to help. Your team of experts can help with tax compliance, preparing financial reports, and keeping on track with your financial goals.​

They can also assist with producing accurate budgets and forecasting for the next year, so you can make the important decisions for your business. Stay on top of your finances and start the next financial year in the best possible shape with Beany. Book a call to discuss your business today.​