The most common end of financial year questions, answered

Taxes might be one of only two certainties in the world of finance, but this doesn’t mean that there’s ever a guarantee about them.

The looming approach of the close of the financial year (EOFY) implies that most small-scale business owners will seek the help of a professional accountant to ensure your affairs are in the right place. To help you make most of your time together, we’ve talked to two top small-business accountants who discussed their most frequent EOFY questions from clients to give you an advantage.

Q. How can I claim my car?

There’s more than one method. One option is to claim it on the kilometre allowance, which is a reimbursement to your business , and does not have income ramifications for you as an individual.

There are rules for keeping 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 been earning an amount of money. Should I consider buying an automobile at the close of the year in order to avoid tax?

When you buy a vehicle it should be about cash flow, not tax. There isn’t any real advantage by purchasing a vehicle right at the end of the trading year. You should consider your cash flow at the beginning of the year in order to maximise the allowance for depreciation and interest.

Q. I’ve got no cash. What can I do to cover my taxes?

You’re going to have to sign a type of arrangement to pay. There are several options to accomplish this. Contact the tax department to arrange a payment plan however, interest will be charged as well as penalties in the event of a late payment.

You may approach companies offering tax pooling. They’re able fund your tax payment via a pooling agreement and the interest rate is often lower than that of the tax department. It’s also more flexible.

A small business loan can be a useful alternative.

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

There is no quick answer that can be standardized because it is wildly different depending on the structure of your business and the tax rates you’re registered for and the industry you operate in.

We generally recommend that clients save around 20-25% of their revenue to with taxation as well as GST, Accident Compensation Corporation (ACC) taxes and any other little surprises all through the year.

Q. Do I have to be GST-registered in the coming financial year?

Also, the answer will differ for each business owner , based on industry, target market and turnover.

You are able to register on your own when you’re likely to exceed the threshold or engage in any activity where GST is included in the industry prices as a rule.

Q. Do I need to do a stocktake?

The simple conclusion is that yes. There is an exemption which lets those with low valuations of stock to simply guess the quantity they hold. But if you’re in the business of selling things, it’s important to know precisely how many things you have to sell.

This process also identifies SLOBS (slow-moving and out-of-date stocks) and allows you to get rid of the item and not purchase it again, thus improving the flow of cash.

Q. Can I do my EOFY taxes myself?

Yes, you can but can you do it correctly? Software available today lets you easily track profits and losses, and to file a tax return with the tax department. However, it does not tell you what you may and aren’t claiming, and doesn’t take a closer look at your overall financial position.

Are you looking to make sure that everything is in order this tax time? Discuss with your accountant the possibility of ticking all the right boxes.