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Get it right and save money when winding up 19 Jun 2019

If you are winding up your business and you’re on a payments basis, save GST by paying as many bills as possible before you deregister.

If you are an ordinary company and incur expenses in the year after giving up business, you’re not going to be able to claim them because there will be no income. You will have an unusable loss.

Have as few bills as possible in the year after ceasing business.

ACC and accounting costs come to mind. You might be able to adjust your provisional payment to ACC for the following year. To be a valid income tax claim, it would have to have been invoiced and be payable before balance date.

For accounting costs, get your financial statements completed, invoiced and paid before balance date. A signed agreement (before balance date) agreeing the amount of the accounting costs would also work if the accounts are completed after balance date.

If you’re winding up about the time of balance date, you could save accounting fees by not continuing in business beyond the end of the financial year.

On the other hand, if your income has been taxed at the top rate and your future income is going to be attracting a lower rate of tax, you could be better to sell (or cease business) part way through a year.

The income for the part year could be taxed at a much lower rate than would have been the case if it’d been part of a full year’s income.

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