Your most frequent end of financial year questions, answered

Taxes may be one of the only two guarantees in life, but that doesn’t mean there is always certainty around them.

The looming approach of the final year of financial reporting (EOFY) is a time when many small business owners will seek the assistance of a professional accountant to make sure they have their finances in the right place. To help you make most of your time working with them, we’ve spoken to two top small-business accountants who given their top client EOFY concerns to give you a head-start.

Q. How do I claim my car?

There’s many ways to. One way to do it would be to claim it as an allowance for kilometres – which will reimburse the cost for your business and does not have income ramifications for the individual.

There are some requirements for the keeping of a logbook. But, if you’ve got a record of your meetings as well as your movements via email, that can be sufficient to justify your claim.

Q. I’ve made some decent money. Do I need to buy an automobile at the close of the year to reduce tax?

When you are buying a car your decision should be about cash flow instead of tax. You’ll not gain any benefit from buying a car towards the close of the year you’ve been trading. You should consider your cash flow prior to the starting of your year to maximize your allowance for depreciation and interest.

Q. I’ve got no cash. How can I make my payment for tax?

You’ll have to enter into some kind of payment arrangement. There are a variety of options to accomplish this. You can reach out to the tax department and arrange a payment plan but you will be charged interest and penalties are imposed if you miss your payment.

You can approach companies that offer tax pooling. They’re able to fund your tax payments through a pooling arrangement , and the interest rate is usually a lot less than the tax department. It’s also more flexible.

A small business loan can be a useful option.

Q. What amount of tax will I have to pay?

There is no easy answer that can be standardized because it is wildly different in relation to the business structure you have, the taxes you are paying and the sector you work in.

We generally suggest that clients save roughly 20-25% of their earnings to cover tax on income, GST, Accident Compensation Corporation (ACC) charges and other small surprises throughout the year.

Q. Do I have to be GST-registered in the coming financial year?

It is true that the answer varies for every business owner based on their industry, the market they want to target and turnover.

It is possible to register for GST on your own if you’re expecting to cross the threshold, or are engaging in an activity where GST includes in the industry prices in the normal course.

Q. Do I need to perform an inventory?

The short solution is yes. There is an exemption which lets those with low valuations of stock to just estimate the stock they have in their inventory. However, if you are in the business of selling items, it’s smart to be aware of the number of items are available to sell.

This process also identifies SLOBS (slow-moving and out-of-date inventory) which allows you to dispose of it , and never purchase it in the future, thereby improving the flow of cash.

Q. Can I do my EOFY taxes myself?

Of course you can, but will you do it right? The software available today allows you to easily run an income and loss and to file a tax return with the tax department. However, it doesn’t tell you what you can and can’t claim, and it does not take a deeper examine your overall financial position.

Are you looking to make sure that everything is in order this tax season? Discuss with your accountant the possibility of ticking all the right boxes.