If it’s your first year in business – Here’s what you need to know about EOFY.
The EOFY for first time business owners means the first time you will need to submit your financial information to IRD. This means supplying all your financial information to your accountant (if you have one) or to collate this yourself to file in your tax return to submit. .
Given the intricacies of tax law we recommend that you consult a qualified advisor. As no one expects first-time business owners to understand all the relevant legislation well enough to get everything right the first time. Accountants can save you from making costly mistakes and supplying the wrong information to IRD. They can also ensure that you have claimed all appropriate expenses for your business.
The NZ income tax year starts on the 1st April and will run through to 31st March. If you are registered with a tax agent (accountant) you will normally get extension of time this allows for your tax return to be filed by the 31st March the following year. E.g. for EOFY ended 31 March 2020 your return would need to be filed by 31 March 2021. If you are not registered with a tax agent your returns will need to be filed by the 7th June. E.g. EOFY 31 March 2020 your return will need to be filed by 7th July 2020.
Online accounting and payroll software
Using a cloud-based accounting software does a lot of the work for you, saving you a lot of stress, and makes it easier for your accountant to access your information. It provides a place to save all your invoices, receipts, wages records and asset registers. It also helps to calculate your GST if you are registered also gives you a clear picture of your cash flow, profit & loss and balance sheet. Check out my other articles to see a comparison of accounting software (Xero, MYOB, quickbooks, invoiceninja) and other helpful apps like Hubdoc.
Ensure that you have backups of your files as hardware can be corrupted especially if you are using a desktop based system.
Finding out how much tax you owe
By using an accounting system this not only gives you a real time view of your business, it also means at the end of the financial year you will be able to work out your business and personal income tax. This will also help to determine if you are due to pay provisional tax the next year.
An accountant can easily do this for you however if you want to DIY your return IRD has a range of calculators to simplify this process.
Claiming expenses
You can claim back any business purchases you’ve made throughout the year. This can include costs such as rent, power and internet for any home office space you’ve used to work from, travel for business purposes, office equipment, motor vehicle expenses and or anything you’ve personally paid for that went towards running your business.
Remember not to claim back any personal expenses against your business. Check out the article on business expenses to ensure that you are claiming all the business expenses you can.
End of Financial Year is also a great time to ensure all your accounts are up to date and ready to send to your accountant. The faster you have the information in the faster you should get your results back. Once you’ve got your file ready for your accountant you can then take a minute, relax and then get ready for the new financial year ahead.