Your most common EOFY questions, answered

Taxes may be one of the two most important things in the world of finance however this doesn’t mean there’s any guarantee that they will be paid.

The looming approach of the closing of the financial year (EOFY) will mean that the majority of small-business owners will be seeking the help of a professional accountant to ensure that all their financial affairs are in the right place. In order to help you make the most of your time with them, we’ve spoken to two renowned small business accountants who given their top client EOFY concerns to give you an early start.

Q. What can I do to claim my car?

There’s many ways to. One method is to claim it as an allowance for kilometres – which will reimburse the cost for your business and doesn’t have any income implications for individuals.

There are requirements for the logbook. But, if you’ve got an inventory of your events as well as your movements via email, that could suffice to prove your claim.

Q. I’ve been making a fair amount of money. Should I consider buying an automobile at the end of the year to reduce tax?

When you are buying a car, the decision should be about cash flow instead of tax. You won’t gain a significant advantage by purchasing a vehicle towards the close of your trading year. You’re better off assessing your cash flow prior to the time of year’s beginning in order to increase the depreciation allowance as well as any interest.

Q. I’ve got no cash. How can I pay my tax bill?

You’ll have to agree to some type of payment agreement. There are a variety of methods to achieve this. You can call the tax department and establish a payment schedule but you will be charged interest and you will be penalized if you miss your payment.

Another option is that you may approach companies offering tax pooling. They’re able to pay for your tax payment by pooling them and the interest rate can be lower than that of taxes paid by tax departments. It’s also more flexible.

A small business loan can be a useful alternative.

Q. What tax do I have to pay?

There is no simple, one-size-fits-all answer to this because it is wildly different based on your business structure, the taxes you are paying and the sector that you are in.

We generally recommend that clients save around 20-25% of their annual turnover to cover income tax and GST, Accident Compensation Corporation (ACC) levies and any little surprises during the year.

Q. Should I be GST registered for the coming year?

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

You are able to register on your own when you’re likely to exceed the threshold or engage in an activity in which GST includes in your industry costs as a standard.

Q. Do I require a stocktake?

The simple answer is yes. There is an exemption which allows people with low value of inventory to estimate the amount of stock they have in their inventory. However, if you are in the business of selling products, it is important to be aware of the number of items you have on hand to sell.

This method also detects SLOBS (slow-moving and out-of-date inventory) which allows you to dispose of the item and not purchase it in the future, thereby improving your cash flow.

Q. Can I do my EOFY taxes myself?

Sure, you can however, can you do it correctly? Software available today makes it easy to run the numbers of a profit and loss and file a return with IRS. It doesn’t inform you what you may and can’t claim, and it does not take a deeper look at your overall financial situation.

Want to get it right this tax season? Consult your accountant about making sure you’ve checked all the right boxes.