The most common end of financial year questions, answered

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

The imminent close of the financial year (EOFY) implies that the majority of small-business owners will seek the services of a professional accountant to ensure that all their financial affairs are in good working order. To make the most of your time together, we’ve talked to two top small-business accountants, who have shared their most common queries regarding EOFY with their clients, so you can get an idea of what to expect.

Q. How do I claim my car?

There are many ways to do it. One way to do it would be to claim it on the kilometre allowance, which will reimburse the cost for your business and does not impact your income for the individual.

There are requirements for the logbook. But, if you’ve got an account of your appointments and activities through your email, that could suffice to prove your claim.

Q. I’ve been earning an amount of money. Would it be worth purchasing a vehicle at the end of the year in order to avoid tax?

When you purchase a vehicle your decision should be about cash flow and not tax. You’ll not gain any benefit by buying a car just at the end of the trading year. You should consider your cash flow prior to the time of year’s beginning in order to maximize your allowance for depreciation as well as any interest.

Q. I’ve got no cash. How do I pay my tax bill?

You’re going to have to sign some sort of arrangement for payment. There are a few methods to achieve this. You can call the tax department and arrange a payment plan however, interest will be charged and you will be penalized if you miss your payment.

You can approach companies that offer tax pooling. They’re able to pay for tax obligations through a pooling arrangement and the interest rate can be a lot less than taxes paid by tax departments. Additionally, it’s more flexible.

A small business loan is a useful alternative.

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

There is no simple solution that is universally applicable as it varies wildly based on your business structure, the taxes you are legally obligated to pay, and the type of business you operate in.

We generally recommend that clients save around 20-25% of their revenue to cover tax on income, GST, Accident Compensation Corporation (ACC) taxes and any other little surprises throughout the year.

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

It is true that 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 for GST if you’re anticipating to reach the threshold or are engaged in an activity where GST will be contained in industry prices as a norm.

Q. Do I need to do an inventory?

The short conclusion is that yes. There is an exemption which lets those with low valuations of stock to just make an estimate of the inventory they have in their inventory. But if you’re operating a business that sells products, it is important to know exactly how many items you have on hand to sell.

This process also identifies SLOBS (slow-moving and out-of-date stocks) which allows you to dispose of it , and never purchase it in the future, thereby improving the flow of cash.

Q. Can I do my EOFY taxes myself?

Sure, you can however, how do you go about doing it correctly? Today’s software lets you easily track profits and losses, and to file a tax return with Tax Department. It doesn’t inform the tax benefits you can’t claim, and it does not take a deeper look at your overall financial position.

Want to get it right this tax time? Discuss with your accountant the possibility of getting all the necessary boxes checked.