The most popular EOFY questions, and answers

Taxes might be one of only two certainties in the world of finance but this doesn’t mean there’s 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 aid of an experienced accountant to ensure all their financial affairs are in good working order. To help you make most of your time together, we’ve talked to two renowned 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 car?

There’s many ways to. One option would be to claim it as the kilometre allowance, which reimburses the cost for your business and is not a tax deductible benefit for individuals.

There are requirements for the keeping of a logbook. But, if you’ve got an account of your appointments and activities through your email, that could be enough to back up your claim.

Q. I’ve been making an amount of money. Do I need to buy a car at the end of the year to save tax?

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

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

You’ll need to agree to some type of payment agreement. There are a few ways to do that. Contact the tax department to create a payment plan but the interest is charged as well as penalties when you don’t make your payment.

You may approach companies offering tax pooling. They can fund your tax bills by pooling them and the interest rates are usually much lower than taxes paid by tax departments. They are also much more flexible.

A small business loan is another beneficial option.

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

There is no quick, one-size-fits-all answer to this as it varies wildly in relation to the business structure you have and the tax you are required to pay and the field you work in.

We generally recommend that clients save roughly 20-25% of their earnings to cover income tax as well as GST, Accident Compensation Corporation (ACC) charges and other small surprises all through the year.

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

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

You can voluntarily register in the event that you’re planning to cross the threshold or engage in an activity that requires GST will be contained in your industry prices in the normal course.

Q. Do I require an inventory?

The simple solution is yes. There’s an exemption that permits those with lower values of stock to simply guess the quantity they hold. If you’re involved in selling products, you should be aware of the number of items are available to sell.

This method also detects SLOBS (slow-moving and out-of-date stocks) to allow you to 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 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 Tax Department. But it doesn’t tell the tax benefits you should not claim, and does not take a deeper look at your overall financial situation.

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