As the financial year comes to a close, tax preparation can feel overwhelming. The good news? A little proactive organisation can make the process much smoother for both you and your accountant. By following these nine best practices, you can ensure your accounts are in great shape and avoid last-minute tax season stress.
1. Give Your Accounting System a Health Check
Think of this as a financial spring cleaning for your business. Ensure all transactions are recorded, reconcile your bank statements, and update accounts payable and receivable. This helps your accountant get a clear picture of your financial health.
2. Gather Essential Tax Documents Early
Don’t wait until the last minute! Collect key documents such as:
- Income statements & expense reports
- Bank & credit card statements
- Payroll records
GST & other tax-related documents
Having everything in one place will save time and reduce stress during tax preparation
3. Conduct a Year-End Stocktake
If your business holds inventory, take the time to count and verify stock levels. Ensure that your records match the actual stock on hand. Accurate inventory valuation is critical for tax compliance and financial reporting.
4. Identify & Write Off Bad Debts
Review your accounts receivable and flag any unpaid invoices that are unlikely to be collected. Writing off bad debts can provide potential tax deductions and ensure your financial statements reflect true revenue.
5. Review Payroll & Prepare for Changes
Stay ahead of any payroll adjustments, such as:
- Minimum wage increases
- ACC levy updates
Changes in employee entitlements
Now is also a great time to evaluate if switching payroll systems could streamline your business operations.
6. Plan for Terminal Tax Payments
Terminal tax is due on April 7, so it’s best to set aside the necessary funds now to avoid cash flow disruptions. Your accountant can help calculate the exact amount you need to pay.
7. Check Your Provisional Tax Obligations
Provisional tax is due on May 7. If your income has changed from the previous year, speak with your accountant to see if adjustments are needed. This proactive approach can help you avoid underpayment penalties.
8. Review Fixed Assets & Depreciation
Take stock of your fixed assets (such as computers, vehicles, and office equipment) and identify items that should be written off. Decluttering your asset register can improve financial accuracy and tax efficiency.
9. Assess Whether a Dividend Needs to Be Declared
If you operate a company, consult your accountant to determine whether a dividend declaration is beneficial before the financial year ends. This decision can impact tax liabilities and shareholder distributions.
Final Thoughts
End-of-year tax preparation doesn’t have to be stressful. By organising your financial records, keeping an eye on tax deadlines, and working closely with your accountant, you can ensure a smooth and efficient tax season.
Need expert guidance? Rodgers Accounting is here to help with all your tax preparation needs. Get in touch with us today!
