Your most popular end of financial year questions, answered

Taxes could be one of the only two guarantees in the world of finance However, this doesn’t mean there’s always certainty around them.

The approaching final year of financial reporting (EOFY) is a time when most small-scale business owners will seek the aid of an experienced accountant to ensure that their affairs are in order. To help you make the most of the time you spend with them, we’ve talked to two renowned small business accountants who have provided their most frequently asked client EOFY concerns in order to help you get an advantage.

Q. How do I claim my vehicle?

There’s more than one way. One option would be to claim it on the kilometre allowance, which will reimburse the cost to your business and does not impact your income for you as an individual.

There are rules for keeping an account book. If you do have a record of your meetings and actions via your email, that could be sufficient to justify your claim.

Q. I’ve earned a fair amount of money. Would it be worth purchasing an automobile at the end of the calendar year to lower tax?

When you buy a vehicle it should be about cash flow and not about tax. You’ll not gain any benefit from buying a car right at the end of the year you’ve been trading. It is better to consider your cash flow at the beginning of the year to maximize the amount of depreciation allowance as well as any interest.

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

It is necessary to sign a type of payment arrangement. There are many methods to achieve this. Contact the tax department to set up a payment plan but interest is charged and penalties are imposed if you miss your payment.

You can approach companies that offer tax pooling. They can fund tax obligations through a pooling arrangement , and the interest rate is usually significantly lower than those offered by the tax office. It’s also a lot more flexible.

A small-business loan is another beneficial option.

Q. What tax do I be required to pay?

There is no quick solution that is universally applicable because it is wildly different according to your business structure as well as the taxes you’re legally obligated to pay, and the type of business that you are in.

We generally recommend that clients save roughly 20-25% of their annual turnover to pay for tax on income as well as GST, Accident Compensation Corporation (ACC) levies , and any small surprise all through the year.

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

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

You are free to sign up when you’re likely to exceed the threshold or engage in an activity where GST includes in industry prices in the normal course.

Q. Do I need to do an inventory?

The simple response is yes. There’s an exemption that allows those with low values of stock to just make an estimate of the inventory they have on hand. But if you’re in the business of selling products, you should be aware of the number of things you have to sell.

This also helps identify SLOBS (slow-moving and obsolete stocks) to allow you to clear it without having to purchase it again, improving your cash flow.

Q. Can I do my EOFY taxes myself?

Sure, you can, but will you do it correctly? Software available today allows you to easily run a profit and loss, and then file a tax return with your tax authorities. However, it does not tell you what you can and can’t claim, and it does not look at your overall financial position.

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.