The most common EOFY questions, and answers

Taxes could be one of the only two guarantees in life, but this doesn’t mean that there’s never a certainty about them.

The looming approach of the end of financial year (EOFY) is a time when most small-scale business owners will be enlisting the help of a professional accountant to ensure that they have their finances in good working order. To make the most of the time you spend together, we’ve talked to two top small-business accountants who provided their most frequently asked questions about EOFY from their clients and give you an advantage.

Q. What can I do to claim my car?

There’s more than one method. One option is to claim it as an allowance for kilometres – which reimburses the cost to your business , and does not impact your income for you as an individual.

There are rules for keeping the keeping of a logbook. But, if you’ve got a record of your meetings and movements through your email, that may be enough to back up your claim.

Q. I’ve been making an amount of money. Should I consider buying an automobile at the close of the year in order to avoid tax?

If you decide to purchase a car your decision should be about cash flow, not tax. There isn’t any real benefit from buying a car towards the close of your trading year. You’re better off considering your cash flow at the time of year’s beginning to maximize your allowance for depreciation as well as any interest.

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

You’re going to have to sign a type of arrangement to pay. There are a few methods to achieve this. You can call the tax department to establish a payment schedule but interest is charged and there are penalties if you miss your payment.

There is another option: you can approach companies that offer tax pooling. They’re able to pay for tax obligations through a pooling arrangement and the interest rate is often a lot less than the tax department. It’s also more flexible.

A small business loan can be a effective option.

Q. What amount of tax will I have to pay?

There is no easy solution that is universally applicable as it varies wildly depending on the structure of your business and the tax you are required to pay and the field you operate in.

We generally recommend that clients set aside between 20 and 25 percent of their annual turnover to with taxation or GST Accident Compensation Corporation (ACC) levies , and any small surprise during the year.

Q. Do I need to be GST registered for the coming financial year?

The answer is different for each business owner , based on industry, target market and turnover.

It is possible to register for GST on your own in the event that you’re planning to cross the threshold or are undertaking any activity where GST is included in industry prices as a rule.

Q. Do I require an inventory?

The short solution is yes. There is an exemption which allows those with low values of stock to just guess the quantity they have available. If you’re in the business of selling products, you should know precisely how many items you have on hand to sell.

The process also flags SLOBS (slow-moving and obsolete stocks) so you can clear the item and not purchase it once more, which will improve your cash flow.

Q. Can I do my EOFY taxes myself?

You can certainly do it however, how do you go about doing it correctly? Today’s software can make it simple to track the numbers of a profit and loss and file a return with the tax department. It doesn’t inform the tax benefits you can’t claim, and it isn’t able to take a examine your overall financial situation.

Want to get it right this tax season? Talk to your accountant about checking all the boxes.