Your most common end of financial year questions, answered

Taxes might be one of two things that are certain in the world however that doesn’t mean there is ever a guarantee about them.

The nearing final year of financial reporting (EOFY) means the majority of small-business owners will be seeking the services of a professional accountant to make sure your affairs are in good order. To make the most of your time with them, we’ve spoken with two top small business accountants who shared their most common client EOFY concerns and give you an early start.

Q. How can I claim my vehicle?

There are many ways to do it. One method would be to claim it on the kilometre allowance, which reimburses the cost for your business and does not impact your income for you as an individual.

There are rules for keeping a logbook. However, if there is an inventory of your events and activities through your email, it could be sufficient to justify your claim.

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

When you buy a vehicle you should make the purchase about cash flow and not tax. There isn’t any real advantage from purchasing a vehicle right at the end of the trading year. It is better to consider your cash flow at 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 am I going to pay my tax bill?

You’ll have to enter into some kind of arrangement for payment. There are a few ways to go about it. You can reach out to the tax department and arrange a payment plan however, interest will be charged as well as penalties in the event of a late payment.

Another option is that you could approach businesses that provide tax pooling. They can fund your tax payment through a pooling arrangement and the interest rate can be significantly lower than that of the department responsible for tax. It’s also a lot more flexible.

A small-business loan is another helpful option.

Q. What tax do I be required to pay?

There is no quick answer that can be standardized as it varies wildly according to your business structure and the tax you are legally obligated to pay, and the type of business that you are in.

We generally suggest that clients set aside between 20 and 25 percent of their turnover to help cover tax on income as well as GST, Accident Compensation Corporation (ACC) levies and any little surprises throughout the year.

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

Again, the answer varies for each 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 undertaking an activity that requires GST can be included into industry prices as a rule.

Q. Do I have to conduct a stocktake?

The simple solution is yes. There’s an exemption that lets those with low valuations of stock to just make an estimate of the inventory they have available. However, if you are operating a business that sells products, you should know exactly how many things you have to sell.

The process also flags SLOBS (slow-moving and obsolete stock) which allows you to dispose of it and not order it again, improving the flow of cash.

Q. Can I do my EOFY taxes myself?

Of course you can however, can you do it right? Today’s software lets you easily track a profit and loss, and submit a tax return to Tax Department. It doesn’t inform you what you can and aren’t claiming, and isn’t able to take a examine your overall financial position.

Do you want to do it right this tax time? Talk to your accountant about getting all the necessary boxes checked.