Important dates and tips to help small businesses prepare for EOFY

Utilizing intuitive accounting software and cloud storage like Google Drive or Dropbox – as well as tenancy management software like myRent.co.nz can save businesses time.

Smaller businesses, such as restaurants or retailers It’s crucial to keep track of stock levels as the time for the end of the fiscal year looms.

If you go to your accountant and are unable to remember your stock level from just a few months ago and you’re having trouble remembering, it’s a problem.

A great reminder for small entrepreneurs is that a temporary boost in the write-off of assets in the moment during COVID-19 from $500 to $5,000 – is being scaled back to $1,000 beginning 17 March 2021.

This is a change that will have a significant impact on small-scale businesses.

Three significant changes are coming in 2021.

Here are some additional significant tax-related changes which have occurred recently or are planned for 2021.

1. Don’t forget that your minimum wage is set to increase by $1.10 and will increase from $18.90 to $20 per hour as of 1 April 2021. It could affect your financial records as well as superannuation payouts.
2. A new personal tax rate will be applied for incomes above $180,000. The new rate will apply from 1 April 2021. Tachibana states that it is more likely to affect those who earn a living through personal services, as opposed to those who have investments and earn capital gains.
3. Make sure you are aware that ACC Earners’ levy, that helps pay for the expenses that are incurred by injuries to employees, will be kept at current levels until 2022 to assist businesses in coping the financial burdens of COVID-19. At the time of January 2021 the levy sits at $1.39 for every $100 (1.39 percent).

The fundamental elements of EOFY success

Here are some important information and dates from experts which small-business owners might wish to consider as they get their home organized for tax season.

1. Finalise your accounts

• Check and approve your bills, invoices and expense claims.
• Follow up overdue accounts and outstanding transactions for a view of the year in its entirety.
• Examine debtors at the time of 31 March, and think about the possibility of writing off any bad debts in order to make them an end-of-year deduction.
• Note clients or suppliers who paid you invoices on the 31st of March or earlier, but who won’t be invoiced until April. Take these costs into consideration as 2020-21 costs.

2. Clean up and reconcile your records

• Incorporate bank statement statements and income tax year-end records, sales, expenses, and purchase records.
• Reconcile your bank accounts and make sure they are in balance with the amounts from your bank statement.
• Prepare your profit and loss statement to calculate the annual profits your business earned.

3. Re-read the information you receive from your payroll company and Inland Revenue

• Assess information taken during EOFY to assess the current financial situation of your business.
• Get your payroll company to provide EOFY data as soon as you can so that it can be analyzed.
• Access to Inland Revenue information, including PAYE tax obligations and KiwiSaver requirements for the employees.

4. Manage superannuation

• Make sure you are aware of your employer’s superannuation contribution tax (ESCT) rates*, with the tax rate differing for each employee based on their salary and length of their tenure.
• Filing electronically, as required, if your business pays $50k or more in tax on PAYE and ESCT.

*For KiwiSaver, businesses need to pay ESCT on compulsory employers’ contributions of 3 percent but not on contributions taken from the wages of employees.

5. Maximise your tax refunds

• Record all expenses and purchases of assets during the year, plus expenditure on improvements or upkeep for claiming any refunds from EOFY.
• Think about disposing of stock that is no longer needed since provisions for obsolete stock or write-downs on stock aren’t typically tax-deductible.
• It is recommended to pay within 63 days of 31 March to obtain a deduction for employee-related expenses like bonuses, holiday pay, and long-service leaves.
• If your earnings are significantly higher than last year, think about making an additional voluntary provisional tax payment to align your tax payments with your earnings.

6. Maintain personal and financial finances distinct

Tax deductions are not usually available for personal expenses. deductions for personal expenses. only business expenses, you could be incurring unnecessary compliance costs If your accountant must determine what tax-deductible and the rest of it.

Important tax dates in 2021

• 9 February 2021 Income tax for 2020 to be paid for those who don’t have a tax agent.
• 1 March 2021 GST return due and payment due by the end of January for those who file their GST returns every two months.
• 21 March Tax year 2020 return due for tax professionals (with an extended time).
• 1. April, 2021 the start of the new financial year begins from New Zealand.
• 7 May 2021 Final installment of the tax proviso for the financial year 2020 and last chance to make tax provisional voluntary payments.
• 7 May 2021 GST tax return at the end of the year and payment due.

Notice: Some dates may be different from the official date, for example, when the due date occurs on a weekend, or a public holiday.