What Financial Statements Does a Small Business in New Zealand Need to Prepare?
Running a small business in New Zealand is not just about making sales and serving customers. It is also about keeping your finances organised and transparent. Financial statements help business owners understand how their business is performing, meet legal requirements and make better decision.
Whether you are a sole trader, partnership or limited company, prepare the right financial statements is very important. In this blog, we will explain which financial statements a small business in New Zealand needs to prepare and why they matter.
1. Profit and Loss Statement (Income Statement)
The Profit and Loss Statement (P&L) shows how much money your business made and spent during a specific period (monthly, quarterly, or yearly).
What it includes:
Sales or revenue
Cost of goods sold (COGS)
Operating expenses (rent, electricity, marketing, wages, etc.)
Net profit or net loss
Why it is important:
Helps you see if your business is profitable
Shows where money is being spent
Helps with tax calculations
Used by accountants, banks, and investors
In New Zealand, this statement is essential for filing income tax returns and understanding business performance.
2. Balance Sheet (Statement of Financial Position)
The Balance Sheet shows what your business owns and owes at a specific point in time.
It is divided into three parts:
Assets – cash, bank balance, equipment, inventory, vehicles
Liabilities – loans, credit cards, unpaid bills, GST payable
Equity – owner’s investment and retained earnings
Why it is important:
Shows the financial strength of your business
Helps banks decide on loans
Required for investors and business valuation
Helps track business growth over time
In New Zealand, the balance sheet is sometimes required for IRD reporting, loan applications, and company compliance.
3. Cash Flow Statement
Many businesses make profits but still face cash problems. That is why the Cash Flow Statement is very important.
What it shows:
Money coming in (customer payments, loans)
Money going out (expenses, loan repayments, GST payments)
Net cash position
Why it is important:
Helps manage daily expenses
Prevents cash shortages
Shows if your business can pay bills on time
Important for GST and tax planning
For small businesses in New Zealand, managing cash flow is critical, especially when dealing with GST payments and seasonal income.
4. GST Return Reports
If your business is registered for Goods and Services Tax (GST), you must prepare GST reports.
These reports include:
Total GST collected on sales
Total GST paid on expenses
Net GST payable or refundable
Why it is important:
Required by Inland Revenue (IRD)
Helps avoid penalties and interest
Keeps your tax records accurate
Most small businesses file GST returns monthly, two-monthly, or six-monthly, depending on their setup.
5. Accounts Receivable and Accounts Payable Reports
These reports show:
Accounts Receivable: Money customers owe you
Accounts Payable: Money you owe suppliers
Why they are important:
Helps follow up on unpaid invoices
Improves cash flow
Prevents missed payments
Keeps supplier relationships healthy
These reports are especially useful for service-based businesses and SMEs in New Zealand.
6. Payroll and PAYE Reports
If you have employees, you must prepare payroll reports.
These include:
Employee wages and salaries
PAYE tax
KiwiSaver contributions
Student loan deductions
Why are they important?
Mandatory reporting to IRD
Helps avoid compliance issues
Keeps employee records accurate
Payroll information is usually submitted through IRD payday filing.
7. Year-End Financial Statements
At the end of the financial year (31 March in New Zealand), businesses need to prepare full year-end financial statements.
These usually include:
Profit and Loss Statement
Balance Sheet
Notes to accounts
Why they are important:
Required for income tax filing
Needed by accountants and auditors
Used for business planning and funding
Limited companies often have stricter reporting requirements compared to sole traders.
Financial statements are not just for accountants or tax filing. They help small business owners in New Zealand understand their business, control costs, manage cash flow, and plan for growth.
Even if you use accounting software like Xero or MYOB, it is important to understand what these reports mean. Regularly reviewing your financial statements can help you make smarter business decisions and stay compliant with New Zealand regulations.
If you are unsure, working with a professional accountant can save time, reduce errors, and give you peace of mind.
FAQs
Yes. Sole traders must prepare at least a Profit and Loss Statement for income tax purposes.
A cash flow statement is not always legally required, but it is highly recommended for managing business finances.
Most small businesses prepare them monthly or quarterly, and full statements are required at year-end.
