10 tips for business owners ahead of EOFY

Chris Dahl, Co-CEO of Pin Payments shares his top tips to help you organise your business finances ahead of EOFY.

The end of the financial year is fast approaching, which means it’s time for business owners to face the erroneous task of sorting through the previous year’s financials. However, tax time doesn’t have to be a source of pain for small businesses. As EOFY approaches, business owners have a golden opportunity to maximise their tax returns whilst ensuring they’re in compliance with tax regulations. With New Zealand officially slipping into its second recession recently, the EOFY is a good opportunity for businesses to buckle down and reset for the new financial year. Here are 10 essential tax tips to help you.

Get organised and utilise technology

Good record-keeping is essential for effective tax planning, but with today’s technology a lot of your record keeping can (or should) be automated. Xero and other payment platforms integrate with your business banking and make it much easier to keep a track of expenses and incomings. Likewise, certain apps enable you to take photos of your receipts in real time and upload them to your accounting or payments platforms. If record keeping isn’t up to scratch, you’ll need to ensure all your financial documents, including receipts, invoices, and bank statements, are properly organised and easily accessible for your accountant. This will streamline the tax preparation process and help you identify any potential deductions or claims.
Make sure you claim all eligible deductions

There are many small business rebates and asset write-offs that you can utilise as a small business in New Zealand, which could prevent you from paying thousands from your taxable business income. Common deductions for small businesses include expenses related to operating costs, advertising, travel, office supplies, and professional services. However, it’s crucial to consult with a qualified accountant or tax advisor to ensure you are claiming the right deductions in accordance with the Inland Revenue Department (IRD). If you’re uncertain what you can claim, visit business.govt.nz.
Review your asset register

This time of year presents a great opportunity to review your asset register and determine if your business assets or tech are obsolete, damaged, or no longer in use. Obsolete stock or stock write downs are not deductible for tax purposes, so it’s important to perform a stock take and to make sure that all obsolete stock is physically disposed of or written down to its net realisable value.
Claim on depreciating assets

Depreciation enables businesses to recover a part of the cost of assets that diminish in value over time, primarily due to wear and tear. It is typically a mandatory process, although businesses are required to inform the Inland Revenue (IR) if they opt not to claim depreciation on certain assets. To proceed with depreciation, it’s necessary to choose an appropriate method of calculation. This process can be applied to a range of assets, including software, websites, and certain types of intellectual property. For efficiency, businesses often streamline their claims by bundling together items of lower value.
Take advantage of instant asset write-off

The instant asset write-off scheme allows small businesses to immediately deduct the full value of eligible assets purchased for business use. Investing in new equipment, technology, or vehicles that qualify for the instant asset write-off before the financial year ends could see your business benefit. The thresholds for the instant asset write-off have changed over time, so it’s important to check the current threshold with the IRD to ensure you understand the eligibility criteria.
Strategise for the year ahead and reconsider your expenses

With New Zealand in its second recession, this EOFY presents a good opportunity to examine your spending from the previous year and see where you might be able to economise in the months ahead. Now is the time to set a clear strategy for your business which considers your projected revenue, plans for the year ahead and expenses, with full consideration of the current domestic economic position.
Pay attention to bad debts and unpaid invoices

Unpaid invoices can significantly impact your business’s cash flow, not to mention give your business a bad reputation with suppliers. Before the end of the financial year, review your accounts receivable and identify any bad debts that are unlikely to be recovered. Writing off these bad debts can provide a tax deduction and help you manage your finances more effectively.
Superannuation contributions for employees

As a business owner, it’s absolutely crucial that you ensure you’ve met any obligations for superannuation contributions for your employees. If in doubt, check with a professional to make sure your compliance and legal obligations have been met and if you do have any outstanding contributions make sure they are made before the end of the financial year to avoid any penalties.
Seek professional advice

Whilst it can be tempting to save pennies and do your own tax, business tax returns can be complex, time consuming and adhere to regulations which often change. Consulting with a qualified accountant or tax advisor who specialises in small business taxation, will ensure you don’t make any mistakes and also assist you to claim as much as legally possible. A qualified agent will provide personalised advice which will be tailored to your business’s specific circumstances and structures, helping you navigate the intricacies of tax planning and ensuring you adhere to all relevant tax laws.
Invest in your staff

Lastly, the EOFY is a great time to evaluate the performances of your staff including their contributions, training and progress and to offer incentives for high value employees. It’s also often the ideal time to offer increased training or other value-adds to those who make your business. Investing in the people behind your brand will pay off in the short and long term and create a culture of inclusivity and appreciation.