Your most popular EOFY questions, answered
Taxes might be one of the two most important things in life but it doesn’t mean that there is always certainty around them.
The looming approach of the close of the financial year (EOFY) means the majority of small-business owners will need the assistance of a professional accountant to ensure that all their financial affairs are in order. To help you make most of your time with them, we’ve talked to two top small-business accountants who have shared their most common EOFY questions from clients in order to help you get an advantage.
Q. What can I do to claim my vehicle?
There’s many ways to. One method would be to claim it on an allowance for kilometres – which reimburses the cost for your business and does not have income ramifications for you as an individual.
There are certain requirements for the keeping of a logbook. However, if there is an inventory of your events and activities through your email, that can be sufficient to justify your claim.
Q. I’ve made some decent money. Do I need to buy an automobile at the close of the year in order to avoid tax?
When you buy a vehicle you should make the purchase about cash flow, not tax. You don’t get a real benefit from buying a car right at the end of the year you’ve been trading. You’re better off assessing your cash flow at the starting of your 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 agree to some type of arrangement to pay. There are a variety of ways to go about it. You can reach out to the tax department and create a payment plan however, interest will be charged as well as penalties in the event of a late payment.
Another option is that you can approach companies that offer tax pooling. They’re able fund your tax payment via a pooling agreement and the interest rate is usually significantly lower than taxes paid by tax departments. It’s also a lot more flexible.
A small business loan can be a useful alternative.
Q. What amount of tax will I have to pay?
There isn’t a quick answer that can be standardized since it differs widely in relation to the business structure you have and the tax you are paying and the sector you operate in.
We typically recommend that clients set aside between 20 and 25 percent of their turnover to help cover income tax or GST Accident Compensation Corporation (ACC) levies and any little surprises throughout the year.
Q. Should I be GST-registered for the coming year?
The answer is different for each business owner depending on industry, target market and turnover.
You are free to sign up in the event that you’re planning to cross the threshold or are undertaking an activity where GST will be contained in industry costs as a standard.
Q. Do I require a stocktake?
The short conclusion is that yes. There is an exemption which lets those with low valuations of inventory to estimate the stock they have in their inventory. But if you’re in the business of selling products, it is important to be aware of the number of items are available to sell.
This method also detects SLOBS (slow-moving and obsolete inventory) and allows you to get rid of the item and not purchase it once more, which will improve the flow of cash.
Q. Can I do my EOFY taxes myself?
Of course you can however, can you do it right? The software available today can make it simple to track profits and losses, and to file a tax return with the tax department. But it doesn’t tell you what you can and can’t claim, and it doesn’t take a closer look at your overall financial situation.
Want to get it right this tax season? Talk to your accountant about checking all the boxes.
