The most popular end of financial year questions, answered

Taxes might be one of the two most important things in this world However, it doesn’t mean that there is always certainty around them.

The nearing end of financial year (EOFY) will mean that numerous small business owners will be seeking the aid of an experienced accountant to make sure their affairs are in good working order. To help you make most of the time you spend with them, we’ve talked to two leading small business accountants who’ve discussed their most frequent questions about EOFY from their clients and give you an early start.

Q. How can I claim my vehicle?

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

There are rules for keeping the logbook. However, if there is an account of your appointments and activities through your email, that could suffice to prove your claim.

Q. I’ve made a fair amount of money. Is it worth buying a car at the end of the year to save tax?

If you decide to purchase a car your decision should be about cash flow and not about tax. You don’t get a real benefit by buying a car right at the end of the year you’ve been trading. You’re better off assessing your cash flow at start of each year in order to maximize your allowance for depreciation and interest.

Q. I’ve got no cash. How do I cover my taxes?

It is necessary to enter into some kind of payment agreement. There are several methods to achieve this. You can reach out to the tax department and set up a payment plan but interest is charged and there are penalties in the event of a late payment.

The alternative is that you can approach companies that offer tax pooling. They’re able fund tax obligations via a pooling agreement and the interest rate is usually a lot less than taxes paid by tax departments. They are also much more flexible.

A small business loan can be a useful alternative.

Q. What tax do I have to pay?

There is no simple, one-size-fits-all answer to this because it differs greatly depending on the structure of your business and the tax you are registered for and the industry you work in.

We generally suggest that clients set aside between 20 and 25 percent of their annual turnover to cover income tax, GST, Accident Compensation Corporation (ACC) charges and other small surprises throughout the year.

Q. Do I have to be GST-registered in the next financial year?

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

You can voluntarily register in the event that you’re planning to cross the threshold, or are engaging in an activity where GST includes in industry costs as a standard.

Q. Do I have to conduct an inventory?

The short response is yes. There’s an exemption that permits those with lower values of stock to just guess the quantity they hold. But if you’re in the business of selling items, it’s smart to know precisely how many items you have on hand to sell.

This process also identifies SLOBS (slow-moving and out-of-date stock) so you can clear it , and never purchase it once more, which will improve the flow of cash.

Q. Can I do my EOFY taxes myself?

Sure, you can, but will you do it correctly? Software available today makes it easy to run an income and loss and file a return with the tax department. However, it doesn’t tell the tax benefits you should not claim, and does not look at your overall financial situation.

Are you looking to make sure that everything is in order this tax season? Consult your accountant about getting all the necessary boxes checked.