The most common EOFY questions, and answers

Taxes may be one of the two most important things in the world of finance but this doesn’t mean there’s never a certainty about them.

The approaching close of the financial year (EOFY) will mean that numerous small business owners will seek the assistance of a professional accountant to ensure that they have their finances in the right place. To help you make the most of the time you spend with them, we’ve talked to two top small-business accountants who have provided their most frequently asked questions about EOFY from their clients to give you an advantage.

Q. How can I claim for my car?

There’s more than one method. One method would be to claim it on a kilometre allowance – that will reimburse the cost for your business and doesn’t have any income implications for your personal income.

There are certain requirements for the keeping of a logbook. If you do have the log of your meetings and activities through your email, it could be sufficient to justify your claim.

Q. I’ve made an amount of money. Should I consider buying an automobile at the end of the calendar year to lower tax?

If you decide to purchase a car it should be about cash flow instead of tax. You don’t get a real advantage from purchasing a vehicle right at the end of your year as a trader. You’re better off assessing your cash flow at beginning of the year in order to increase the depreciation allowance as well as any interest.

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

You’re going to have to agree to some type of arrangement for payment. There are many options to accomplish this. You can contact the tax department and create a payment plan but the interest is charged and you will be penalized 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 bills through a pooling arrangement , and the interest rates are usually much lower than the tax department. It’s also a lot more flexible.

A small business loan can be a helpful option.

Q. How much tax will I have to pay?

There is no simple answer that can be standardized because it is wildly different according to your business structure, the taxes you are legally obligated to pay, and the type of business you operate in.

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

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

The answer is different for each business owner depending on their industry, the market they want to target 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 will be contained in your industry prices as a rule.

Q. Do I require a stocktake?

The simple solution is yes. There is an exemption which lets those with low valuations of inventory to estimate the amount of stock they have available. However, if you’re operating a business that sells products, it is important to know precisely how many things you have to sell.

This process also identifies SLOBS (slow-moving and obsolete stocks) and allows you to get rid of it and not order it again, thus improving your cash flow.

Q. Can I do my EOFY taxes myself?

Yes, you can, but will you do it right? The software available today allows you to easily run an income and loss and to file a tax return with the tax department. But it doesn’t tell you what you may and can’t claim, and it does not take a deeper review of your financial situation.

Do you want to do it right this tax season? Talk to your accountant about making sure you’ve checked all the right boxes.