It's the end of another financial year, so it's time to gather your records to give to your chartered accountant. If you're organised, this can be a quick job. For some people, it can be a mundane task, accompanied by feelings of trepidation and dread, particularly if this past year has been a difficult one for you. If you have negative feelings associated with this task, then get it over with quickly and give yourself a little reward afterwards.

Reality Check #1: Your chartered accountant already has a good idea of how you have been performing this year, especially if you have been in touch during the year. Reality Check #2: Your chartered accountant won't judge you based on the quality of the information you provide. We chartered accountants may thrive on balancing the books, but we understand that it isn't everyone's favourite business discipline. Let's get to it!

If you're using a cloud accounting package, then it may already be done. Get a copy of the last bank statement of the year, and compare it to your bank reconciliation report. If there are receipts or payments that you are unsure of, give as much information as you have available (copies of invoice or email discussions around the payment). Do this for every bank account, credit card account and term loan account operated by the business.

If you're not using a cloud accounting package then make sure your chartered accountant has access to your bank statements or software backup.

Review your list of debtors before year end and check if they are still collectible.

To claim a tax deduction for bad debts, they must be written off before the end of the financial year. In your accounting software raise a credit note to clear the debt or write Bad Debt across the invoice in your invoice book. To decide whether a customer balance (debtor) is a bad debt or merely doubtful, consider the age of the debt, how much effort has gone into chasing the debt and the likelihood of the debt being collected. Writing off a bad debt gives a more accurate reflection of the business's financial results, but does not prevent the business from continuing to seek recovery of the debt.

Review your list of creditors, and follow up if they include items which are on backorder, or you are waiting on credits for defects.

Value your trading stock at balance date, at the lower of cost or market selling price. If you sell an item below cost just before balance date, then you can value the remaining items at that price. Dispose of any obsolete stock before your stock take, in order to claim the deduction.

Inventory should be counted as close to balance date as possible. Remember to include stock in transit, if the purchase cost has been paid or included in creditors. If your turnover is $1.3m or less for the year and you estimate your inventory on hand is less than $10,000, you don't have to do a stock take; you can use your opening stock figure for your closing stock figure.

If you estimate your consumable aids (like oil in a factory) cost under $58,000 then you don't need to include them in stock or prepayment adjustments at year end.

There may be some expenses invoiced in the past year, which are for services you will receive in the following year. You would usually make a prepayments adjustment at year end, but you don't need to adjust for these prepayments:

Accounting costs (mandatory) and audit fees

Advertising (under $14,000, up to 6 months)

Insurance (contract under $12,000, up to 12 months)

Periodic charges (under $14,000, up to 12 months)

Postage and courier tickets

Professional subscriptions (under $6,000, up to 12 months)

Rates

Rent (under $26,000, up to 6 months)

Services (under $14,000, up to 6 months)

Stationery

Subscriptions for newspapers, magazines

Telephone maintenance (up to 2 months)

Travel and accommodation (under $14,000, up to 6 months)

Vehicle registrations, road user charges

Warranties or equipment service contracts as inseparable part of the asset

For all other prepayments, let your chartered accountant know the amount invoiced, what it is for, and the period the invoice amount covers.

If you collect deposits from customers before work begins, or send invoices to customers for an event to occur later in the year, we don't treat these as revenue for tax purposes. Let your chartered accountant know the amount invoiced, what it is for, and the period the invoice amount covers.

Retentions on building contracts are generally taxable in the year the contractor becomes legally entitled to receive them. Let us know of any retentions so we don't include them in income.

Run a report from your payroll system, or make a written list, of the holidays owing to staff at year end. Note which ones were paid out within 63 days after year end, so you can claim a tax deduction. For instance, if you have a 31 March year end, you can claim the holiday pay as an expense if it was paid on or before 2 June.

Similarly, if you are paying staff bonusses or long-service leave, make sure that you pay it on or before 2 June to include in your 31 March year end expenses.

Purchases of assets costing less than $1,000 (excluding GST if registered) can be automatically expensed, unless they are part of the construction of a larger asset. Review your depreciation schedule from last year. Assets which have been disposed of (or put in a dingy corner because they are too costly to dump) can be written off from the books so that a loss on disposal can be claimed.

You may want to defer the sale of a significant asset until after balance date, to push the depreciation recovery income (profit on sale of asset) into the next tax year.

If you used part of your family home to operate your business, then you can make a home office claim for business expenses. This is usually based on the floor area of the home office as a percentage of the total floor area of the house. Add up your household expenses like rent or rates, insurance, water, electricity, gas, repairs, cleaning, then multiply by the percentage.

IRD publishes a square metre rate each tax year for estimating the household costs (2020-2021: $44.75 per square metre) if you want to save time. But note, this figure doesn't include rent, interest or rates so you'll still need to work out a percentage of those costs.

For home telephone landline you can claim 50% of the rental, plus business toll calls. For home internet, you can decide your business proportion, but we tend to go with 50%.

If you use your private vehicle for business, you can claim a kilometre rate as an expense using either the IRD rates or another reputable alternative, like AA. If you use your business vehicle privately, let your chartered accountant know what percentage, so they can make an adjustment to expenses, otherwise FBT will apply.

If you have made loans to employees, you will need to charge interest on those loans at the FBT prescribed interest rate or higher (4.5% from 1 July 2020). Otherwise FBT is payable calculated on the interest amount you didn't charge.

If shareholders have drawn more out of the company than earned in salary, discuss your options with your chartered accountant. It may be appropriate to increase the shareholder-employee salary or declare a dividend or charge interest, depending on your circumstances.

If your income is significantly higher than the previous year then you should consider paying voluntary provisional tax on top of what you are already required to pay. If it is significantly lower than the previous year, then talk to your chartered accountant about whether you can estimate down your provisional tax.

If you don't have a provisional tax obligation but make a voluntary payment of income tax before 31 March, you may qualify for an early payment discount of 6.7%. This is only available if you are a sole trader or in a partnership in your first year of making a profit for the business. There are some other criteria, so check with your chartered accountant.

If there's a transaction you aren't sure about, perhaps an expense that you want claim, send your question to your chartered accountant. We are happy to clarify these uncertainties and we come across lots of curly questions.

When you have sent this information off to your chartered accountant, you can reward yourself for a job done well. Perhaps a chocolate biscuit or refreshing drink? A few minutes of sunshine on your face before tacking the next task? Whatever to choose to reward yourself with, smile and enjoy it.

- Serena Irving

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Serena Irving is a director in JDW Chartered Accountants Limited. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.

A well-written article like this, which is general in nature, is no substitute for specific tax advice. If you want more information about the issues in this article, please contact the author.