Your most common EOFY questions, and answers

Taxes might be one of the two most important things in this world However, 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 need the services of a professional accountant to ensure that your affairs are in good order. To help you make most of your time with them, we’ve talked to two renowned small business accountants, who have shared their most common queries regarding EOFY with their clients in order to help you get a head-start.

Q. How do I claim my car?

There’s more than one method. One way to do it is to claim it as the kilometre allowance, which reimburses the cost to your business and is not a tax deductible benefit for your personal income.

There are requirements for the logbook. But, if you’ve got an account of your appointments and activities through your email, it could be sufficient to support your claim.

Q. I’ve earned some decent money. Is it worth buying a vehicle at the end of the year to save tax?

When you are buying a car, the decision should be about cash flow and not about tax. There isn’t any real benefit by buying a car right at the end of your trading year. It is better to consider your cash flow at the time of year’s beginning in order to maximise the allowance for depreciation and any interest.

Q. I’ve got no cash. How do I be able to pay for my tax bills?

It is necessary to sign some sort of arrangement to pay. There are many options to accomplish this. You can call the tax department and create a payment plan but interest is charged and there are penalties for late payments.

You might approach businesses offering tax pooling. They’re able to fund your tax bills through a pooling arrangement , and the interest rate is often lower than that of taxes paid by tax departments. It’s also a lot more flexible.

A small business loan is a beneficial option.

Q. What tax do I be required to pay?

There isn’t a quick solution that is universally applicable because it is wildly different based on your business structure as well as the taxes you’re paying and the sector you work in.

We generally suggest that clients save around 20-25% of their earnings to pay for tax on income as well as GST, Accident Compensation Corporation (ACC) levies , and any small surprise throughout the year.

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

Again, the answer varies for every business owner based 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 engaged in any activity where GST is included in industry costs as a standard.

Q. Do I need to do a stocktake?

The simple conclusion is that yes. There’s an exemption that allows those with low values of inventory to estimate the amount of stock they have on hand. But if you’re operating a business that sells products, you should know precisely how many items are available to sell.

This method also detects SLOBS (slow-moving and out-of-date inventory) which allows you to dispose of the item and not purchase it again, 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 a profit and loss, and submit a tax return to IRS. But it doesn’t tell you what you can and aren’t claiming, and isn’t able to take a review of your financial situation.

Do you want to do it right this tax time? Consult your accountant about checking all the boxes.