Your most frequent end of financial year questions, answered

Taxes are perhaps one of two things that are certain in this world however this doesn’t mean that there’s ever a guarantee about them.

The nearing closing of the financial year (EOFY) will mean that numerous small business owners will need the services of a professional accountant to make sure their affairs are in order. To make the most of your time together, we’ve talked to two renowned small business accountants who have given their top EOFY questions from clients in order to help you get an idea of what to expect.

Q. What can I do to claim my vehicle?

There’s many ways to. One method would be to claim it as the kilometre allowance, which reimburses the cost to your company and does not impact your income for you as an individual.

There are certain requirements for an account book. However, if there is a record of your meetings as well as your movements via email, that may be sufficient to support your claim.

Q. I’ve made an amount of money. Is it worth buying an automobile at the close of the calendar year to lower tax?

When you are buying a car, the decision should be about cash flow and not tax. There isn’t any real advantage from purchasing a vehicle near the end of the trading year. It is better to consider your cash flow at start of each year in order to maximize your allowance for depreciation as well as any interest.

Q. I’ve got no cash. What can I do to make my payment for tax?

It is necessary to sign some sort of payment arrangement. There are a variety of options to accomplish this. You can call the tax department to arrange a payment plan but you will be charged interest as well as penalties if you miss your payment.

There is another option: you might approach businesses offering tax pooling. They’re able to fund your tax bills through a pooling arrangement and the interest rate is often much lower than taxes paid by tax departments. Additionally, it’s more flexible.

A small business loan can be a helpful option.

Q. What amount of tax will I be required to pay?

There isn’t a quick, universal solution to this since it differs widely depending on the structure of your business and the tax rates you’re paying and the sector you operate in.

We generally recommend that clients set aside between 20 and 25 percent of their revenue to cover tax on income as well as GST, Accident Compensation Corporation (ACC) levies , and any small surprise during the year.

Q. Do I need to be GST registered for the coming year?

Also, the answer will differ for each business owner depending on their industry, the market they want to target and turnover.

It is possible to register for GST on your own in the event that you’re planning to cross the threshold or are undertaking any activity where GST includes in the industry prices in the normal course.

Q. Do I have to conduct an inventory?

The simple response is yes. There’s an exemption that allows people with low value of stock to just make an estimate of the inventory they have available. If you’re involved in selling products, it is important to be aware of the number of items you have in your inventory to sell.

This process also identifies SLOBS (slow-moving and out-of-date inventory) which allows you to dispose of the item and not purchase it once more, which will improve your cash flow.

Q. Can I do my EOFY taxes myself?

Yes, you can however, can you do it correctly? Today’s software allows you to easily run a profit and loss, and file a return with the tax department. However, it doesn’t tell the tax benefits you cannot claim, and does not analysis of your overall financial position.

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