The most popular end of financial year questions, and answers

Taxes are perhaps one of the only two guarantees in life However, that doesn’t mean there is never a certainty about them.

The nearing end of financial year (EOFY) will mean that numerous small business owners will be enlisting the assistance of a professional accountant to ensure all their financial affairs are in good order. To make the most of the time you spend with them, we’ve spoken to two renowned small business accountants who have discussed their most frequent client EOFY concerns, so you can get a head-start.

Q. How do I claim my car?

There’s more than one method. One way is to claim it as a kilometre allowance – that covers the expense for your business and does not have income ramifications for individuals.

There are certain requirements for an account book. If you do have the log of your meetings and actions via your email, that could be sufficient to justify your claim.

Q. I’ve earned an amount of money. Is it worth buying an automobile at the end of the year to reduce tax?

When you are buying a car your decision should be about cash flow and not tax. You’ll not gain any advantage from purchasing a vehicle right at the end of your trading year. You’re better off assessing your cash flow at the start of each year in order to maximize the amount of depreciation allowance as well as any interest.

Q. I’ve got no cash. How can I cover my taxes?

It is necessary to agree to some type of arrangement for payment. There are a few ways to do that. Contact the tax department and create a payment plan but you will be charged interest and there are penalties in the event of a late payment.

You may approach companies offering tax pooling. They can fund your tax bills through a pooling arrangement , and the interest rate can be much lower than that of the department responsible for tax. Additionally, it’s more flexible.

A small business loan is a helpful option.

Q. What tax do I have to pay?

There is no simple, one-size-fits-all answer to this because it is wildly different according to your business structure and the tax you are required to pay and the field that you are in.

We generally recommend that clients save around 20-25% of their revenue to cover income tax, GST, Accident Compensation Corporation (ACC) charges and other small surprises all through the year.

Q. Should I be GST-registered for the next financial year?

Also, the answer will differ for each business owner based on industry, target market and turnover.

You can voluntarily register when you’re likely to exceed the threshold or are engaged in an activity in which GST can be included into your industry prices as a norm.

Q. Do I need to do a stocktake?

The short conclusion is that yes. There’s an exemption that allows people with low value of inventory to estimate the amount of stock they have in their inventory. However, if you’re in the business of selling products, it is important to know precisely how many things you have to sell.

This process also identifies SLOBS (slow-moving and out-of-date stocks) to allow you to clear it without having to purchase it again, thus improving your cash flow.

Q. Can I do my EOFY taxes myself?

Of course you can however, how do you go about doing it correctly? Software available today can make it simple to track profits and losses, and to file a tax return with the tax department. It doesn’t inform the tax benefits you cannot claim, and doesn’t take a closer analysis of your overall financial position.

Want to get it right this tax time? Discuss with your accountant the possibility of ticking all the right boxes.