The most popular EOFY questions, answered
Taxes could be one of only two certainties in this world, but it doesn’t mean that there is ever a guarantee about them.
The nearing end of financial year (EOFY) will mean that numerous small business owners will be seeking the aid of an experienced accountant to ensure that all their financial affairs are in the right place. To help you make the most of your time working with them, we’ve spoken to two leading small business accountants who given their top EOFY questions from clients and give you an advantage.
Q. How can I claim my vehicle?
There are many ways to do it. One way to do it would be to claim it as an allowance for mileage – this covers the expense to your business , and does not have income ramifications for individuals.
There are some requirements for an account book. But, if you’ve got a record of your meetings as well as your movements via email, that may be sufficient to justify your claim.
Q. I’ve made some decent money. Is it worth buying a car at the end of the year to save tax?
When you are buying a car you should make the purchase about cash flow and not about tax. You won’t gain a significant benefit by buying a car just at the end of the trading year. You should consider your cash flow prior to the starting of your year in order to maximize the amount of depreciation allowance and any interest.
Q. I’ve got no cash. How can I make my payment for tax?
It is necessary to enter into some kind of payment agreement. There are a variety of ways to go about it. You can call the tax department and establish a payment schedule but interest is charged and there are penalties if you miss your payment.
There is another option: you can approach companies that offer tax pooling. They’re able to fund your tax bills through a pooling arrangement and the interest rate can be lower than that of taxes paid by tax departments. They are also much more flexible.
A small-business loan is another helpful alternative.
Q. What tax do I be required to pay?
There is no simple, one-size-fits-all answer to this since it differs widely in relation to the business structure you have and the tax rates you’re registered for and the industry you work in.
We typically recommend that clients save around 20-25% of their revenue to with taxation as well as GST, Accident Compensation Corporation (ACC) levies and any little surprises throughout the year.
Q. Should I be GST-registered for the coming financial year?
The answer is different for each business owner based on the type of business, the target market and turnover.
You can voluntarily register for GST if you’re anticipating to reach the threshold or engage in an activity that requires GST is included in the industry costs as a standard.
Q. Do I need to do a stocktake?
The short answer is yes. There’s an exemption that lets those with low valuations of stock to simply make an estimate of the inventory they hold. But if you’re in the business of selling things, it’s important to know exactly how many items you have in your inventory to sell.
This also helps identify SLOBS (slow-moving and obsolete inventory) so you can clear it and not order it once more, which will improve your cash flow.
Q. Can I do my EOFY taxes myself?
Of course you can but can you do it right? Software available today lets you easily track a profit and loss, and submit a tax return to IRS. It doesn’t inform you what you can and should not claim, and isn’t able to take a review of your financial situation.
Do you want to be sure you are doing it right this tax season? Discuss with your accountant the possibility of checking all the boxes.
