Your most popular EOFY questions, and answers

Taxes may be one of only two certainties in life, but this doesn’t mean that there’s always certainty around them.

The looming approach of the closing of the financial year (EOFY) implies that the majority of small-business owners will be enlisting the aid of an experienced accountant to ensure that their affairs are in order. In order to help you make the most of the time you spend together, we’ve talked to two top small-business accountants, who have provided their most frequently asked questions about EOFY from their clients and give you an advantage.

Q. How can I claim for my vehicle?

There’s more than one method. One way to do it would be to claim it on an allowance for mileage – this will reimburse the cost to your business , and does not impact your income for the individual.

There are requirements for a logbook. However, if there is a record of your meetings and activities through your email, that could be sufficient to support your claim.

Q. I’ve earned some decent money. Is it worth buying a vehicle at the end of the year in order to avoid tax?

When you are buying a car, the decision should be about cash flow and not about tax. There isn’t any real benefit from buying a car towards the close of your trading year. It is better to consider your cash flow prior to the starting of your year in order to maximize your allowance for depreciation and any interest.

Q. I’ve got no cash. How am I going to make my payment for tax?

You’re going to have to agree to some type of payment agreement. There are several methods to achieve this. You can contact the tax department and set up a payment plan but interest is charged and penalties are imposed if you miss your payment.

The alternative is that you may approach companies offering tax pooling. They’re able to pay for tax obligations through a pooling arrangement , and the interest rate is often much lower than those offered by the tax office. They are also much more flexible.

A small business loan is another effective option.

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

There isn’t a quick solution that is universally applicable because it differs greatly depending on the structure of your business as well as the taxes you’re legally obligated to pay, and the type of business you operate in.

We usually recommend that our clients save between 20 and 25% of their turnover to help pay for tax on income or GST Accident Compensation Corporation (ACC) levies , and any small surprise all through the year.

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

The answer is different for each business owner depending on their industry, the market they want to target and turnover.

You are able to register on your own in the event that you’re planning to cross the threshold or engage in an activity in which GST can be included into your industry costs as a standard.

Q. Do I need to perform a stocktake?

The simple conclusion is that yes. There’s an exemption that allows those with low values of stock to simply guess the quantity they have available. But if you’re involved in selling products, it is important to know precisely how many items are available to sell.

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

Q. Can I do my EOFY taxes myself?

Yes, you can however, can you do it correctly? Today’s software lets you easily track a profit and loss, and submit a tax return to the tax department. However, it doesn’t tell the tax benefits you aren’t claiming, and does not take a deeper analysis of your overall financial position.

Want to get it right this tax time? Talk to your accountant about getting all the necessary boxes checked.