Date: 7th February 2012
March heralds the end of the tax year for the majority of small businesses in New Zealand. The lead-up to the filing deadline in July is an unpleasant experience for many; involving countless late nights wading through unruly piles of receipts, invoices and statements, trying to make sense of transactions from nine months ago or even further back.
The good news is that it doesn’t have to be this way. Find out how a little bit more attention and discipline can turn your filing chore into a small and relatively easy task. The secret is to avoid procrastinating!
Keep your accounts in order throughout the year
Many businesses tend to avoid anything to do with tax until the deadline looms ominously, glowering with the threat of penalties. Then, under pressure, they tackle the lopsided and untidy piles of paper in the vain hope of trying to remember what happened in their business many months ago, or sometimes even longer than a year ago.
The main trick to easing this sort of last minute pressure is to keep your accounts up to date on a monthly basis. If you keep your monthly accounts in order throughout the year, then there’s not too much left to do when you get to year end. It really is that simple.
Keeping your accounts up to date has other benefits too. You’ll understand your financial position during the year, be able to assess your likely tax position and its implications before year-end, and be able to monitor the progress of your business and make adjustments where necessary during the year.
Lose some of the stress by using technology
You’ll probably be able to reduce your financial year-end stress by making better use of technology to minimise any reliance on paper filing. Try using:
Microsoft Excel spreadsheets or equivalent. Spreadsheets allow you to analyse figures, perform complex calculations and produce graphs, and they are easy to learn to use. If you need to calculate sales and expenditure for a certain period, for example, using a spreadsheet is a good way to crunch the numbers.
Computerised accounting programs. These automated programs make record keeping much simpler and faster.
Online banking for access to your accounts 24/7. Makes bank reconciliations that much easier.
Register for e-filing – this can make things quicker and easier for you or your accountant.
Another way to reduce the year-end stress is to avoid the last minute rush. Just because the deadline is in July, it doesn’t mean that you can’t file early. Set your own deadline and get your returns filed early. This might seem counterintuitive, but there’s little point in waiting until the last minute, when you can get the job done at a more comfortable pace just by starting early.
This also ensures you have a safety net if there are any unexpected or unavoidable delays in completing your accounts.
Draw up a financial year-end plan
An effective way to manage the stress of year-end accounts is to approach it like any other project – and project manage it. All you need to do is draw up a list of things you need to do before you can file your annual returns (sit down with your book-keeper and accountant to draw up your list). Then put a timeline to the various tasks, assign tasks to responsible people and monitor your progress to filing day.
It is a good idea to build in some safety margins. Some tasks might take longer than expected and hold back your progress. You’ll also want to try to identify the more complicated tasks, like organising a stock take and updating your asset register, and plan these in great detail.
Good communication and feedback with all the people involved in your financial year-end project will ensure you meet your tax obligations with the least stress and fuss.
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