Year-End Accounting for New Zealand Businesses: A Practical Guide

Table Of Contents

Year-End Accounting Guide for New Zealand Businesses

Start With Your Books: Reconciliation First

Before you can do anything useful at year-end, your books need to be clean. This means that every transaction in your accounting software, whether it’s Xero, MYOB, or another accounting system, must reconcile with what actually happened in your bank accounts. This is known as bank reconciliation, and it’s the basis for everything else on this checklist.

Now, look at each of your bank accounts, credit cards, and loan accounts. Are there any discrepancies that you haven’t accounted for? Get them sorted out now. These are often due to double-counted transactions, missing invoices, or bank fees that were incorrectly assigned. If you don’t get them sorted out, they’ll add up, and your financial reports will be telling you a different story altogether.

Also, take stock of your accounts receivable and accounts payable. Who owes you money? Who do you still owe? Aged receivables, like invoices that are 90+ days overdue, may need to be written off as bad debts. This is actually a deductible expense in NZ, so don’t ignore it.

GST: Get This Right Before Anything Else

GST compliance is non-negotiable in New Zealand. At year-end, you need to make sure every GST return you’ve filed during the year is accurate and reconciles to your accounting records. If your numbers don’t match what’s in your books, that’s a red flag for you and for Inland Revenue.

Check that input tax credits have been claimed only on legitimate business expenses. Personal expenses that accidentally got coded as business ones are a common audit trigger. If you use your vehicle for both personal and business purposes, make sure you’ve got a logbook or are using an approved IRD method for the split.

For businesses on an invoice basis (rather than payments basis), review any invoices issued near year-end that haven’t been paid yet. These still count as income in the year they were invoiced, not when the cash arrives. This catches a lot of people out.

The Year-End Accounting Checklist: Core Tasks to Complete

Here’s the heart of it. Run through each of these before you close out the year:

1. Stocktake and inventory valuation

If you carry inventory, you need a physical count as of 31 March. NZ tax rules require inventory valuation at cost or market value, whichever is lower. Don’t just trust your software, count it. Discrepancies between your physical count and system records need to be investigated and adjusted.

2. Fixed asset register review

Go through your fixed asset register and confirm every asset listed is still in use. Assets that have been disposed of, lost, or fully depreciated need to be removed or updated. Also check whether any new assets purchased during the year have been correctly capitalised and added to the register with the right depreciation rate based on the IRD’s schedule.

3. Payroll reconciliation

If you have employees, reconcile your total PAYE paid to IRD against your payroll records. The introduction of payday filing in NZ means errors surface faster now, but year-end is still the time to catch any gaps. Also confirm that employee KiwiSaver deductions and employer contributions are correct and have all been filed and paid.

4. Shareholder current accounts

For companies, shareholder current accounts need careful review. If a shareholder has drawn more from the company than they’re entitled to, this can create an overdrawn current account, which has fringe benefit tax (FBT) or interest implications under IRD rules. Don’t leave this one for your accountant to find at the last minute.

5. Accruals and prepayments

You need to accrue or prepay expenses that have been incurred but not yet invoiced. This is important so that your profit and loss account reflects the correct period. For example, wages earned in the last week of March but paid in April, or insurance premiums paid for the next year.

6. Loan and finance reconciliation

Pull your loan statements for any business loans or hire purchase arrangements. Reconcile the closing balance to what’s in your accounts, and separate the interest component from the principal repayments. Only the interest is tax-deductible; the principal repayment is not.

7. Director fees and wages

If your company pays director fees, these need to be declared and have the correct PAYE deducted. Sometimes this is left until the end of the year as a journal entry. If that’s the case, make sure it’s processed before 31 March, not after.

Tax Planning: Don’t Leave Money on the Table

Year-end is one of the best times to do some quick tax planning. Once you have a good estimate of your taxable income for the year, there are ways to legally cut your tax bill as long as you do it before 31st March.

You could pay deductible expenses before the end of the year, or purchase new equipment that qualifies for immediate expense treatment under the low-value asset threshold of $1,000 in NZ, to reduce taxable income this year. Conversely, if you can defer income recognition to the new financial year, perhaps by not sending out invoices until 1st April for work completed close to the end of the year, that pushes your taxable income into the new year.

Also, review whether you need to make a provisional tax payment. If your residual income tax (RIT) last year was over $5,000, you’re in the provisional tax regime. Underestimating or not paying the provisional tax can result in use-of-money interest from IRD. Run an estimate before year-end so you’re not blindsided.

Reviewing Your Financial Statements: What to Actually Look At

Once the reconciliation and adjustments are done, you’ll be generating your annual financial statements, the balance sheet, the profit and loss, and often a cash flow statement. A lot of business owners sign off on these without really reading them. That’s a missed opportunity.

Compare this year’s numbers to last year’s. Where has your gross profit margin changed? Are your overheads growing faster than your revenue? Is your working capital position healthy — meaning, can you pay your bills as they come due? These questions matter far more than just knowing whether you made a profit.

Also, look at your balance sheet. Are there any large assets that look out of place? Any liabilities you’d forgotten about? The balance sheet tells you the health of the business at a point in time — the profit and loss tells you the story of how you got there.

What Comes After 31 March: Post-Year-End Tasks

Your obligations don’t end when the financial year closes. There are a few things to tick off in the weeks that follow.

Income tax return: Your IR3 (individual) or IR4 (company) income tax return must be filed with the IRD. The standard due date is 7 July, but if you have a tax agent, this is usually extended. Confirm the extended deadline with your accountant. Don't assume.
Assess your accounting processes: The end of the year is a good time to reflect on whether your current accounting systems are still relevant. Are you still doing things manually that could be automated? Small gains in this area will save you hours over the next 12 months.
Create a budget for the coming year: From your actual year-end figures, create a budget and cash flow forecast for the coming year. Even a simple projection of income and expenses each month provides a baseline to compare against.
Set budgets for the new year: Using your actual year-end numbers as a base, build a budget and cashflow forecast for the new financial year. Even a simple monthly projection of income and expenses gives you a benchmark to track against.

The Most Common Year-End Mistakes NZ Businesses Make

Mixing personal and business expenses is still the number one issue. Even if you’re a sole trader, you need a separate business bank account and clear records for any shared expenses. IRD doesn’t accept vague estimates without supporting documentation.

Not claiming all allowable deductions is also surprisingly common. Home office expenses, vehicle costs, professional subscriptions, training, and development. These are all legitimate deductions for many NZ businesses. If your accountant doesn’t ask about them, you need to bring them up.

And not keeping records for the required seven years. IRD can audit you for up to four years back in most cases (longer if fraud is suspected). You need supporting documents for every transaction in your accounts. In the cloud era, there’s no excuse for not having these stored and backed up.

Make Year-End a Process, Not a Crisis

A well-run year-end accounting checklist is really just the result of habits maintained throughout the year. Monthly or quarterly reviews, clean bank reconciliations, and properly coded transactions make the 31 March deadline feel like a formality rather than a fire drill.

If you’re not there yet, use this year-end as the reset point. Work through the steps above, get organised, and set yourself up so that next March, you’re reviewing clean books rather than trying to reconstruct the year from memory.

And if you need support from an experienced team that genuinely understands New Zealand’s compliance landscape, that’s what Indian Muneem Chartered Accountant is here for.