The end of another financial year is fast approaching and with that in mind we’ve put together our top tips to ensure you are ready…
Top tip # 1
Get your records ready.
Whilst most of the information will be in Xero we do require some items from you:
- Ensure your Xero is up to date;
- Bank statements at 31 March so we can confirm the Xero balances are correct – if easier, a screenshot of your bank balance on 31 March is ok too;
- Bank loan summaries at 31 March;
- Invoices for assets purchased (assets over $5,000 excl. GST);
- Any new finance/HP agreements since 1 April 2020.
Top tip # 2
Don’t forget about your home office.
If you are completing work from home, a portion of your home expenses can be claimed as a business expense. Common home expenses that can be used in this calculation are rates, home & contents insurance, power, internet/phone and rent or mortgage interest. You will also need to provide the total area of your house along with the total area of the space set aside for work related tasks. For more information about this, check out our previous blog Tax tips with MHCO part 1 – Claiming Home Office
Top tip # 3
Complete a stock take.
If you carry stock of more than $10,000 then you will need to complete a stock take so we know how much stock you have at 31 March 2021. Stock can heavily affect your profit, and therefore tax, so it’s important we get this right. When completing the stock take we need the GST exclusive figure. The amount you give us should be the lower of what you paid for the stock and its estimated value. (9 times out of 10 this will just be the cost value).
Top tip # 4
Write off bad debts.
Don’t pay tax on money you won’t receive! If you have done all you can to recover a debt and are ready to write them off, you need to make sure this is done before 31 March 2021 in order for the tax deduction to apply. If you are unsure how to write off a debt give us a call. Also if you haven’t already, consider sending the debt to a debt collection agency such as these guys: https://www.collectit.co.nz
Top tip # 5
Remember the minimum wage increase.
Just a reminder that the minimum wage will increase by $1.10 in April, from $18.90 to $20.00. If you have adult employees (16 years and over) earning less than $20.00 an hour, you are legally required to increase their wage from 01/04/2021.
Top tip # 6
Minor Asset threshold changes
Part of the COVID-19 tax relief provided by the government increased the minor asset threshold from $500, to $5000. This threshold drops back to $1,000 on 17 March 2021. And assets or major repair works can be expensed if under this threshold, otherwise the items get capitalised and included in your asset list.
Top tip # 7
Consider your goals for the upcoming year.
As we close out another financial year, ensure you take a moment to reflect on the year that was and then look forward to the upcoming year. Even more so, in these uncertain and unsettling times, it’s important to refocus and ensure you have an up-to-date business plan and third party to help you set your goals and help coach you to achieve them. We are here to help. Get in touch with us if you want to update your business plan, reset your goals, prepare a budget, or, have a business coach to help guide you and your business through the next year.
Get in touch with us if you have any questions or concerns – the MHCO team.