The most common EOFY questions, and answers

Taxes could be one of only two certainties in the world, but that doesn’t mean there is any guarantee that they will be paid.

The looming approach of the end of financial year (EOFY) implies that numerous small business owners will be seeking the services of a professional accountant to ensure your affairs are in good order. To help you make the most of your time with them, we’ve talked with two top small business accountants who have given their top EOFY questions from clients, so you can get an idea of what to expect.

Q. How can I claim for my car?

There’s more than one way. One option would be to claim it on an allowance for kilometres – which covers the expense to your business and does not have income ramifications for you as an individual.

There are some requirements for a logbook. However, if you have a record of your meetings as well as your movements via email, that could be enough to back up your claim.

Q. I’ve been earning some decent money. Is it worth buying an automobile at the end of the year in order to avoid tax?

When you are buying a car your decision should be about cash flow and not tax. You’ll not gain any benefit by buying a car right at the end of your trading year. You should consider your cash flow at the beginning of the year in order to maximize the amount of depreciation allowance and 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 for payment. There are several options to accomplish this. Contact the tax department to arrange a payment plan but the interest is charged as well as penalties when you don’t make your payment.

There is another option: you can approach companies that offer tax pooling. They’re able fund your tax payment through a pooling arrangement , and the interest rate can be a lot less than that of the department responsible for tax. It’s also more flexible.

A small business loan can be a beneficial alternative.

Q. How much tax will I be required to pay?

There is no easy, universal solution to this because it differs greatly depending on the structure of your business and the tax rates you’re required to pay and the field you work in.

We typically recommend that clients set aside between 20 and 25 percent of their revenue to with taxation or GST Accident Compensation Corporation (ACC) charges and other small surprises all through the year.

Q. Should I be GST registered for the coming year?

Again, the answer varies for every business owner based 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 an activity that requires GST includes in the industry prices as a norm.

Q. Do I need to perform a stocktake?

The simple answer is yes. There’s an exemption that permits those with lower values of stock to just estimate the amount of stock they hold. But if you’re involved in selling things, it’s important to know precisely how many items you have on hand to sell.

The process also flags SLOBS (slow-moving and obsolete inventory) so you can clear it , and never purchase it in the future, thereby improving your cash flow.

Q. Can I do my EOFY taxes myself?

Sure, you can however, can you do it right? The software available today makes it easy to run the numbers of a profit and loss and submit a tax return to the tax department. However, it does not tell you what you may and cannot claim, and doesn’t take a closer look at your overall financial position.

Do you want to do it right this tax season? Discuss with your accountant the possibility of ticking all the right boxes.