Completing your business’s financial end-of-year work now will give you accurate data to make informed business decisions. Get your end-of-financial-year work done now so you can focus on your business and the goals you have set for the year.
A new financial year is fast approaching, and that means it is time to check the accuracy of your financial information and to gather the documentation that we, as your accountants, will need to finalise your accounts and file your tax returns.
The sooner we have this information, the sooner we can complete your accounts and notify you of your tax position. It’s a good idea to have this information as soon as possible so that you can make informed business decisions based on accurate data.
If you feel that your business will look significantly different this financial year, contact the ilumin team so that we can accurately estimate any provisional tax.
The following list shares details to check, gather and look for:
Bank Reconciliations
All bank reconciliations, including credit card and loan accounts, should be up to date to the end of March. This means that all transactions have been entered, that there are no unreconciled transactions and that the bank account balance at your bank matches the balance in your accounting software. We may also need to see verification of bank account balances in the form of bank statements.
Accounts Receivable
Ensure all sales for the previous financial year have been invoiced (dated in March or prior months) and run your aged receivables report to verify that the information on this report (what is owed to you) is accurate. Follow up on any overdue customer balances and consider whether or not any are uncollectable and should be written off as bad debts.
Accounts Payable
Make sure all supplier bills for the previous financial year have been received and entered into your accounting system. Check the statements from your suppliers and verify that their balance owed is the same as what you have recorded. Run your aged payables report to verify that the information on this report – what you owe – is accurate.
Inventory
If you carry inventory you need to complete a stock take at the end of the financial year to account for all of the stock that you have purchased but have not yet sold. This means doing a manual count of all of your stock on hand as of 31 March.
Fixed Assets and Depreciation
Take a look at your fixed asset register from last year and let us know if anything on that register has been sold or disposed of. Fixed assets are any asset over $1000*. The rules around these assets are that the cost of the asset is spread over the expected lifetime of the asset rather than expensed all in one financial year. The spreading of the cost is called depreciation. As your accountants, we may need to see invoices for fixed asset purchases, so attach them to the transaction in your accounting software or create a file or folder that you can share with us.
*The threshold went to $5000 from 17 March 2020 to 16 March 2021, then down to $1000 from 17 March 2021.
Payroll and Wage and Leave Liabilities
If you have staff, ensure that the final payroll for the financial year has been entered into your accounting software. You need to account for any wages owed to staff and annual leave liabilities at the end of the financial year in order to accurately reflect the business’s liabilities on the balance sheet. If you’re using payroll software you will be able to generate a report telling you how much these are. These two liability accounts also need to be reconciled to verify the accuracy of the balances.
Loans and Hire Purchases
Any loans or hire purchase balances will need to be verified and accurately accounted for at the end of year. Gather up your loan documentation that includes the balance at year-end, along with the interest accrued and payments made.
GST
Ensure your final period GST Return (usually ending March 31) has been finalised and filed with Inland Revenue.
Cash on Hand
Do you keep petty cash for small purchases? If so, you will need to ensure that all cash expenditure is entered and accounted for and that you accurately account for the value of cash on hand.
Vehicle Expenses
We will need to know if you use your personal vehicle for business use, or vice versa so that we can accurately account for motor vehicle expenses.
Home Office
If you use part of your home for business use, you can claim a portion of household expenses, such as rent, insurance and power, against your business income. How much you can claim depends on how much of your house you use. Total up your household bills for the year and talk to us about how much you can claim.
Other Balance Sheet Items
All items on your balance sheet must be able to be verified and have supporting evidence. If you are unable to verify a balance, let us know and we can help you out.
Profit and Loss Report
Run your Profit & Loss report for the year and check if your figures look reasonable and as expected. It can be helpful to run this report by month so you can easily see variations from month to month. You may also compare against the budget and/or last year’s actual figures. If things don’t look quite right, consider whether any variances may be caused by transactions miscoded to the wrong account.
Lock your Accounting System
Once your month-end and subsequently year-end results are complete, set your accounting system’s lock date for “All users” on the last day of the month (e.g. 31 March). This stops anybody from accidentally entering transactions into the past year(s) after they have been finalised and closed.
If you would like guidance and support when it comes to preparing for the end of the financial year, contact the ilumin team today.