The most frequent end of financial year questions, answered

Taxes could be one of only two certainties in the world however that doesn’t mean there is ever a guarantee about them.

The looming approach of the closing of the financial year (EOFY) means numerous small business owners will be enlisting the assistance of a professional accountant to make sure your affairs are in good order. In order to help you make the most of your time together, we’ve talked to two top small-business accountants who have shared their most common queries regarding EOFY with their clients, so you can get an early start.

Q. How can I claim my car?

There’s more than one way. One method would be to claim it on a kilometre allowance – that reimburses the cost to your business and does not have income ramifications for individuals.

There are rules for keeping the logbook. If you do have a record of your meetings and movements through your email, that may be sufficient to justify your claim.

Q. I’ve made quite a bit of money. Should I consider buying a car at the end of the year to reduce tax?

When you are buying a car your decision should be about cash flow and not about tax. You don’t get a real benefit by buying a car right at the end of your trading year. You should consider your cash flow prior to the time of year’s beginning in order to maximize your allowance for depreciation and interest.

Q. I’ve got no cash. What can I do to be able to pay for my tax bills?

It is necessary to enter into some kind of payment arrangement. There are several options to accomplish this. You can reach out to the tax department to set up a payment plan however, interest will be charged and there are penalties when you don’t make your payment.

The alternative is that you can approach companies that offer tax pooling. They’re able to pay for your tax payments via a pooling agreement and the interest rate is often much lower than that of the department responsible for tax. They are also much more flexible.

A small business loan is a helpful alternative.

Q. What tax do I be required to pay?

There isn’t a quick answer that can be standardized as it varies wildly 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 tax on income as well as GST, Accident Compensation Corporation (ACC) charges and other small surprises all through the year.

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

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

You can voluntarily register if you’re expecting to cross the threshold, or are engaging in an activity in which GST will be contained in your industry prices as a rule.

Q. Do I need to do an inventory?

The simple response is yes. There’s an exemption that allows those with low values of stock to simply guess the quantity they have in their inventory. However, if you’re in the business of selling items, it’s smart to be aware of the number of items are available to sell.

The process also flags SLOBS (slow-moving and out-of-date stock) so you can clear the item and not purchase it once more, which will improve your cash flow.

Q. Can I do my EOFY taxes myself?

You can certainly do it but can you do it right? Today’s software makes it easy to run a profit and loss, and to file a tax return with Tax Department. It doesn’t inform you what you can and cannot claim, and isn’t able to take a examine your overall financial position.

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