Preparing for end-of-year accounts: A checklist for Kiwi SMEs

The end of the financial year is a critical time for small and medium-sized enterprises (SMEs) in New Zealand. It’s the period when businesses close their books, reconcile accounts, and prepare financial statements for tax reporting. Proper preparation ensures compliance with the Inland Revenue Department (IRD), avoids penalties, and provides a clear picture of your business’s financial health.

For many small business owners, the end-of-year accounting process can seem overwhelming. However, with a clear checklist and systematic approach, you can streamline this process, save time, and make informed business decisions. This guide outlines a comprehensive end-of-year accounting checklist specifically for Kiwi SMEs.

1. Review Your Financial Records

Before doing anything else, ensure your financial records are accurate, complete, and up to date. This includes:

• Bank statements – Reconcile all bank accounts and credit card statements.

• Invoices – Ensure all sales invoices are issued, and payments are recorded.

• Receipts – Record all business expenses, including cash payments.

• Payroll records – Ensure all pay-runs for the year have been filed and paid

Accurate records prevent mistakes when preparing financial statements and calculating tax obligations.

2. Reconcile Accounts

Reconciliation ensures your financial records match your bank statements and other external records. Key accounts to reconcile include:

• Bank accounts and credit cards – Verify deposits and payments.

• Accounts receivable – Confirm outstanding customer payments and write off bad debts if necessary.

• Accounts payable – Ensure all supplier invoices are recorded and unpaid amounts are accurate.

• Inventory – Conduct stock counts and adjust for losses, damages, or obsolete items.

Reconciliation is critical to avoid discrepancies in your financial statements and ensure your business has an accurate picture of cash flow.

3. Review Your Fixed Assets

Fixed assets such as machinery, vehicles, or office equipment require proper accounting. Steps include:

• Depreciation – Ensure depreciation is calculated correctly for each asset according to IRD rules.

• Asset disposals – Remove sold or disposed assets from the records and calculate gains or losses.

• Obsolete assets – Verify that the remaining asset values are reasonable and identify any obsolete assets to be removed.

Properly accounting for assets ensures that your balance sheet accurately reflects the value of your business resources.

4. Prepare Financial Statements

Financial statements are crucial for tax reporting, business planning, and decision-making. The key statements include:

• Profit & Loss Statement (Income Statement) – Summarizes revenues, expenses, and net profit or loss.

• Balance Sheet – Shows the financial position of your business, including assets, liabilities, and equity.

Ensure these statements are prepared accurately and in line with accounting standards, as they are essential for tax compliance and potential lenders or investors.

5. Review GST Obligations

If your business is GST-registered, it’s important to:

• Ensure all GST invoices and payments are accurately recorded.

• File any outstanding GST returns for the year.

• Reconcile GST accounts in your accounting software to match IRD records.

Proper GST management prevents penalties and ensures smooth end-of-year compliance.

6. Check PAYE and Payroll Compliance

Payroll is often a source of errors during the year-end process. Review the following:

• Employee earnings and deductions, including PAYE and KiwiSaver contributions.

• Employer contributions and obligations.

• Year-end payroll adjustments, such as holiday pay or bonuses.

A thorough payroll review ensures compliance and prevents disputes or fines.

7. Review Tax Deductions and Expenses

Identify all legitimate business expenses that can reduce taxable income, including:

• Operating expenses: rent, utilities, insurance, marketing, and office supplies.

• Vehicle expenses: fuel, maintenance, and depreciation.

• Professional fees: accounting, legal, or consulting costs.

• Travel and entertainment: only business-related costs are deductible.

Tip: consider if any such expenses can be paid before 31 March, rather than after, so that you get the tax deduction this year.

Ensure expenses are properly documented with invoices or receipts to support claims in case of an IRD audit.

9. Conduct Internal Reviews

Year-end is also an opportunity to conduct internal reviews to strengthen financial controls:

• Review internal processes for errors, fraud risks, or inefficiencies.

• Ensure that authorisations and approvals for payments are documented.

• Check that all contracts, leases, and obligations are up to date.

A robust internal review improves business governance and provides peace of mind for stakeholders.

10. Meet with Your Accountant

While many SMEs manage bookkeeping internally, consulting a professional accountant is highly recommended at year-end:

• Ensure all financial statements comply with accounting standards.

• Get expert advice on tax planning and deductions.

• Review business performance and prepare for growth or investment decisions.

An accountant can also help identify potential errors or overlooked opportunities that could save money or improve efficiency.

11. Document and Store Records

IRD requires businesses to keep records for at least seven years. Make sure you:

• Store digital or paper copies of all invoices, receipts, and statements.

• Maintain payroll, GST, and bank records.

• Organise documents by category for easy access in case of audits.

Well-organised records reduce stress, save time, and ensure compliance.

12. Plan for the Next Financial Year

End-of-year preparation is also an opportunity to plan for the future:

• Review budgets and cash flow projections for the upcoming year.

• Set financial goals and performance benchmarks.

• Identify areas for growth, cost-saving, or investment.

A structured planning process ensures your business starts the new financial year with confidence and direction.

Conclusion

Preparing end-of-year accounts doesn’t have to be overwhelming. By following this comprehensive checklist, Kiwi SMEs can ensure compliance, improve financial control, and gain actionable insights into business performance.

Key steps include: reviewing financial records, reconciling accounts, preparing financial statements, checking GST and payroll obligations, conducting internal reviews, consulting accountants, and planning for the next year.

A proactive approach to year-end accounting not only avoids penalties but also empowers business owners with a clear understanding of their finances, enabling better decision-making and sustainable growth.

By adopting these practices, your SME can transition into the new financial year efficiently, confidently, and strategically.

What our clients say

“Dylan is one of the best accountants I've worked with. He makes a point of explaining things as plainly as possible to those of us who don't understand accounting speak. He has a solid knowledge of best practices in the industry, but most importantly he will always recommend what is most suitable for your specific business. I will continue to recommend Dylan and Affinity Accounting to my clients when they are looking for an accountant.”

-Jay Brooker