Your most frequent EOFY questions, answered

Taxes might be one of the two most important things in the world of finance, but this doesn’t mean there’s always certainty around them.

The looming approach of the close of the financial year (EOFY) will mean that the majority of small-business owners will be enlisting the aid of an experienced accountant to ensure they have their finances in the right place. To help you make most of the time you spend working with them, we’ve spoken with two top small business accountants who have given their top questions about EOFY from their clients and give you an early start.

Q. How can I claim for my vehicle?

There’s more than one method. One option would be to claim it on the kilometre allowance, which covers the expense to your company and does not impact your income for the individual.

There are requirements for a logbook. However, if there is a record of your meetings and movements through your email, it could be enough to back up your claim.

Q. I’ve made a fair amount of money. Would it be worth purchasing an automobile at the end of the year to reduce tax?

If you decide to purchase a car you should make the purchase about cash flow and not about tax. You won’t gain a significant advantage by purchasing a vehicle right at the end of the trading year. You’re better off considering your cash flow prior to the beginning of the year in order to maximise the allowance for depreciation and any interest.

Q. I’ve got no cash. How am I going to make my payment for tax?

You’re going to have to agree to some type of arrangement to pay. There are a few ways to do that. Contact the tax department to create a payment plan but you will be charged interest and there are penalties in the event of a late payment.

Another option is that you could approach businesses that provide tax pooling. They can fund your tax bills through a pooling arrangement , and the interest rate is usually a lot less than that of the department responsible for tax. Additionally, it’s more flexible.

A small business loan is another effective option.

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

There isn’t a quick solution that is universally applicable since it differs widely depending on the structure of your business and the tax rates you’re paying and the sector you operate in.

We generally suggest that clients set aside between 20 and 25 percent of their earnings to with taxation as well as GST, Accident Compensation Corporation (ACC) taxes and any other little surprises throughout the year.

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

Again, the answer varies for every business owner based on the industry, market and turnover.

You are free to sign up when you’re likely to exceed the threshold, or are engaging in any activity where GST includes in industry prices as a rule.

Q. Do I have to conduct a stocktake?

The short solution is yes. There’s an exemption that allows people with low value of stock to simply estimate the stock they have in their inventory. If you’re operating a business that sells items, it’s smart to be aware of the number of items are available to sell.

This method also detects SLOBS (slow-moving and obsolete stock) to allow you to clear it , and never purchase it once more, which will improve the flow of cash.

Q. Can I do my EOFY taxes myself?

You can certainly do it however, can you do it right? The software available today makes it easy to run a profit and loss, and file a return with IRS. But it doesn’t tell you what you can and can’t claim, and it isn’t able to take a review of your financial position.

Do you want to do it right this tax time? Discuss with your accountant the possibility of getting all the necessary boxes checked.