The most popular EOFY questions, and answers

Taxes might be one of the two most important things in life however that doesn’t mean there is never a certainty about them.

The approaching close of the financial year (EOFY) implies that most small-scale business owners will need the help of a professional accountant to ensure they have their finances in good order. To help you make the most of your time working with them, we’ve spoken to two renowned small business accountants who have discussed their most frequent client EOFY concerns to give you an early start.

Q. How can I claim for my car?

There’s more than one method. One way to do it would be to claim it as an allowance for kilometres – which reimburses the cost for your business and is not a tax deductible benefit for the individual.

There are requirements for the keeping of a logbook. However, if there is a record of your meetings and actions via your email, that can be sufficient to justify your claim.

Q. I’ve earned quite a bit of money. Is it worth buying a vehicle at the end of the year to reduce tax?

When you purchase a vehicle you should make the purchase about cash flow instead of tax. There isn’t any real advantage by purchasing a vehicle towards the close of the year you’ve been trading. It is better to consider your cash flow prior to the time of year’s beginning to maximize your allowance for depreciation and any interest.

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

You’ll need to agree to some type of arrangement for payment. There are a variety of ways to go about it. You can call the tax department and set up a payment plan however, interest will be charged as well as penalties if you miss your payment.

The alternative is that you might approach businesses offering tax pooling. They’re able to pay for your tax bills by pooling them and the interest rate can be a lot less than those offered by the tax office. Additionally, it’s more flexible.

A small business loan can be a helpful alternative.

Q. What tax do I have to pay?

There is no quick answer that can be standardized because it is wildly different based on your business structure as well as the taxes you’re required to pay and the field you operate in.

We typically recommend that clients save around 20-25% of their revenue to with taxation and GST, Accident Compensation Corporation (ACC) levies and any little surprises all through the year.

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

It is true that the answer varies for every business owner based on the industry, market and turnover.

It is possible to register for GST on your own if you’re expecting to cross the threshold or are undertaking an activity in which GST will be contained in industry prices in the normal course.

Q. Do I require a stocktake?

The simple answer is yes. There’s an exemption that allows people with low value of stock to just estimate the stock they have in their inventory. If you’re in the business of selling things, it’s important to know precisely how many things you have to sell.

This process also identifies SLOBS (slow-moving and out-of-date inventory) so you can clear it without having to purchase it once more, which will improve your cash flow.

Q. Can I do my EOFY taxes myself?

Sure, you can however, how do you go about doing it right? Software available today allows you to easily run the numbers of a profit and loss and to file a tax return with IRS. However, it does not tell the tax benefits you should not claim, and isn’t able to take a review of your financial position.

Do you want to be sure you are doing it right this tax season? Consult your accountant about checking all the boxes.