Are you ready for the end of another (unprecedented) year? 

Although it may not be your favourite time as a small business owner, the end of the financial year (EOFY) is the perfect time to reflect on your past 12 months in business – and plan for the next. 

You’ll need to submit your income tax return to Inland Revenue to figure out how much income tax you owe for the past year. Getting ready simply means getting your books in order so your business’ financial performance can be accurately reflected in your income tax return.

So come EOFY, it’s essential to be on top of all things financial. And, in 2021-22, we’ve got the added complexities of COVID-19 to deal with (again). COVID has been keeping everything in flux: from the evolving rules around isolating and testing, through to changing government assistance for workers and businesses. 

Managing your EOFY stuff under normal circumstances is a big task, but under COVID circumstances it’s extra challenging. So we’ve broken it down for you into nine manageable chunks. 

The Top 9 To-Dos For This End of Financial Year

1. Understand Part 1: What’s Changing

Policies and laws change, and it’s essential that you’re aware of what will affect your business come tax time. Here are some key things to be aware of in 2021/22:

• The minimum wage will rise to $21.20 from April 2022. This could potentially affect your financial records and superannuation payments.

• Increases to the ACC Earners’ levy, which funds the costs associated with employee injuries, were paused to help businesses deal with the financial pressures of COVID-19. But this April, the levy will increase from $1.39 per $100 (1.39%) to $1.46 per $100 (1.46%).

• Employee sick leave entitlement increased from 5 to 10 days per year.

• A new Matariki public holiday has been introduced

2. Understand Part 2: What’s Changing, COVID-Edition!

Since March 2020, COVID-19 has meant potentially reduced income, government-provided support via wage subsidies, resurgence payments and small business loans. This is an ever-evolving situation, and it’s important you know your entitlements at EOFY time. 

Check out https://www.business.govt.nz/covid-19/financial-support-for-businesses/ and talk to us at CornerStone to help come to terms with what COVID stuff you need to keep in mind at EOFY time. 

3. Chase: Outstanding Invoices

Unpaid invoices slipped through the cracks? Now’s the time to send out reminders and follow up. Collect as much of the outstanding cash as you can. By working through your debtors and putting these checks in place now, you’ll have an accurate reflection of what’s owing to you come year end. 

Then, make sure you set up automatic invoice reminders in Xero to keep the cash flowing in throughout the year without you needing to manually chase it.

4. Log: Business Expenses

When you pay for something necessary for the everyday running of your business, it’s a business expense that you can claim tax back on. Every business expense claim reduces your tax bill and leaves more cash in your business. Unsure if it’s a business expense or not? Double check with us here at Cornerstone.

5. Organise: Paperwork

When putting together your business statements, you need to make sure you have all the “paperwork” to prove your incomings and outgoings. Make sure you’ve got physical or digital copies of:

• bank and loan statements

• invoices from suppliers

• credit card/hire purchase statements

• records of payments to other contractors or employees

• receipts for any expenses.

6. Do: Stocktake

If your business keeps stock and materials, you’ll need to do a stocktake. Use this opportunity to adjust stock quantities where needed and generate an up-to-date inventory list. 

7. Finalise: Payroll

Got staff on the books? Review salary and wage information, make any legislative updates to employee pay rates and determine your Superannuation/Kiwisaver requirements.

Be aware of those important tax-related changes that have recently occurred or are on the agenda for 2022 (refer back to point number 1 here!).

8. Simplify: Accounting With Online Tools

At Cornerstone, we are specialists in Xero software. Let us set Xero up for you and provide full training and support, giving you the tools to successfully manage your business with beautiful accounting software. Xero can make the EOFY so much simpler. Ask us how!

9. Our Top Tip: Outsource!

Who has time to tackle EOFY by themselves? No business owner that I know! So, make tax time easier by having a numbers expert on your team.

At Cornerstone Bookkeeping, we love to help you keep your books in order. Make your EOFY easier by gathering your info and sending it to us – we’ll do the nitty gritty while you can get back to the day-to-day business you love.

We’ll work to get your records up to date and prepared for year end so you can simply hand them over to your accountant to finalise your tax return and year end accounts.

Contact us today to find out how we can help.