The most frequent EOFY questions, and answers

Taxes are perhaps one of the two most important things in the world of finance but this doesn’t mean there’s ever a guarantee about them.

The nearing close of the financial year (EOFY) is a time when numerous small business owners will need the help of a professional accountant to ensure all their financial affairs are in order. In order to help you make the most of the time you spend with them, we’ve spoken to two top small-business accountants who’ve discussed their most frequent EOFY questions from clients, so you can get an idea of what to expect.

Q. How do I claim my car?

There’s many ways to. One way would be to claim it as a kilometre allowance – that reimburses the cost to your company and does not have income ramifications for individuals.

There are some requirements for an account book. If you do have a record of your meetings and activities through your email, that could be sufficient to support your claim.

Q. I’ve earned some decent money. Would it be worth purchasing a vehicle at the end of the year in order to avoid tax?

When you buy a vehicle your decision should be about cash flow and not tax. You don’t get a real benefit by buying a car towards the close of the trading year. You’re better off considering your cash flow at time of year’s beginning in order to maximise the allowance for depreciation and interest.

Q. I’ve got no cash. What can I do to cover my taxes?

You’ll need to sign a type of payment agreement. There are many options to accomplish this. Contact the tax department and establish a payment schedule but the interest is charged and penalties are imposed when you don’t make your payment.

There is another option: you may approach companies offering tax pooling. They’re able fund your tax payment by pooling them and the interest rate is usually lower than that of that of the department responsible for tax. It’s also more flexible.

A small business loan is another helpful option.

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

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

We generally recommend that clients save between 20 and 25% of their annual turnover to cover income tax, GST, Accident Compensation Corporation (ACC) levies , and any small surprise all through the year.

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

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

You can voluntarily register in the event that you’re planning to cross the threshold, or are engaging in an activity in which GST can be included into the industry costs as a standard.

Q. Do I need to perform an inventory?

The simple response is yes. There’s an exemption that permits those with lower values of inventory to make an estimate of the inventory they hold. If you’re in the business of selling products, it is important to know exactly how many items you have in your inventory to sell.

This process also identifies SLOBS (slow-moving and obsolete inventory) which allows you to dispose of the item and not purchase it again, 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? The software available today lets you easily track profits and losses, and to file a tax return with the tax department. However, it does not tell you what you can and can’t claim, and it isn’t able to take a examine your overall financial situation.

Are you looking to make sure that everything is in order this tax season? Talk to your accountant about ticking all the right boxes.