End of Financial Year – 31 March 2023 – What do you need to consider?
With the end of the financial year approaching, it’s a good time to make sure everything is in order and ready for balance date. Here’s a few things to consider and/or action for the end of year the financial year.
Write off Bad Debts
Do you have debtors that you’ve taken all reasonable steps to recover a debt, yet your customer still hasn’t paid you? You might be able to write the debt off as a Bad Debt and claim a deduction and should do so before the end of the year. Make sure you have a record of your attempts to claim the debt from your client.
Count your Stock / Inventory as at 31 March 2023
Do you hold inventory or stock? This might include livestock, such as cattle or sheep. Carry out a stocktake as at 31 March 2023 to ensure your Stock / Inventory value is accurately accounted for in your end of year accounts. Remember to dispose of any obsolete lines or write the stock down if required.
Likewise with your stock levels, it’s a good opportunity to do a stock take of your Fixed Assets the business owns. Have you purchased or sold any assets? Did any assets break over the course of the year and need to be disposed of? Check your Depreciation schedule from your last set of accounts, or your own fixed asset register if you have one and check all your assets are current, and write down which ones are no longer usable or have been sold.
Allocate credit balances against sales invoices
Make sure any customer credits sitting on your Aged Receivables (Debtors) list are allocated or applied to any sales invoices as necessary.
Work in Progress
Do you have projects or jobs you’re in the middle of for your customers? This could be accounted for as Work in Progress. Invoice everything you can out to customers by the end of the year, but if you can’t send an invoice just yet, make sure you have a record of the costs to date associated with projects that are underway.
GST Returns for the period ended 31 March 2023
|If our team prepares your GST return, you will receive an email from your Bookkeeper in the first few days of April to request the following:|
- All bank transactions are coded and any queries responded to promptly – within 2 working days is ideal!
- All copies of business bank statements showing the closing balances as at 31 March 2023.
Paperwork for any ‘special’ transactions, such as new loans set up or assets purchased during the period.
What to do on 1st April in relation to payroll
Minimum Wage increases 1 April 2023
The government has announced that the adult minimum wage will increase by $1.50 an hour to $22.70 from 1 April 2023 to align with inflation. The training and starting-out minimum wages will also both increase to $18.16 per hour, remaining at 80% of the adult minimum wage. This is a rise from the current minimum rate of $16.96 per hour.
Will this impact your business? Do you need to relook at your cashflow?
Check your employees meet minimum wage requirements, including those on piece meal and box rates
Special Tax Codes
If you have any staff or contractors with special tax codes or exemptions, these need to be provided for each year. A new IR330 is required if not, otherwise the Non Declaration code should be used from 1 April.
Review employees ESCT rates at 1st April
April 1st you need to review your employees ESCT rates to check they are correct in accordance with Inland Revenue’s requirements.
Employer superannuation contribution tax (ESCT) is the tax paid to Inland Revenue on the employer contributions to employees’ superannuation funds, not on any employee contributions.
You need to work out the correct tax rate for each employee, based on either their:
- Previous full year’s earnings plus your employer superannuation contributions
- Estimated earnings next year (if they haven’t been employed for the full year) plus your employer superannuation contributions
Payroll software updates
Prepare a list of changes, and test that the changes are working properly. This includes the tax rates, Kiwisaver calculations and the new Student Loans thresholds.
We cover all this and more in our Payroll Essentials training course. Next intake starting 25th May. Check out the website for more details, or contact us to discuss.