Your most common EOFY questions, answered

Taxes could be one of the only two guarantees in this world, but that doesn’t mean there is any guarantee that they will be paid.

The imminent close of the financial year (EOFY) will mean that many small business owners will be enlisting the services of a professional accountant to ensure they have their finances in order. To make the most of your time together, we’ve talked with two top small business accountants, who have provided their most frequently asked questions about EOFY from their clients in order to help you get an idea of what to expect.

Q. How can I claim my car?

There’s many ways to. One way to do it is to claim it on a kilometre allowance – that will reimburse the cost to your company and does not have income ramifications for individuals.

There are some requirements for a logbook. However, if there is an account of your appointments and actions via your email, that could be sufficient to support your claim.

Q. I’ve earned some decent money. Do I need to buy a vehicle at the end of the calendar year to lower tax?

If you decide to purchase a car it should be about cash flow and not about tax. You don’t get a real advantage from purchasing a vehicle right at the end of your year as a trader. You should consider your cash flow prior to the beginning of the year to increase the depreciation allowance and any interest.

Q. I’ve got no cash. What can I do to be able to pay for my tax bills?

You’ll have to enter into some kind of arrangement to pay. There are several methods to achieve this. You can contact the tax department and arrange a payment plan but interest is charged and you will be penalized when you don’t make your payment.

The alternative is that you can approach companies that offer tax pooling. They can fund your tax bills through a pooling arrangement , and the interest rates are usually a lot less than that of the department responsible for tax. It’s also more flexible.

A small business loan is another beneficial alternative.

Q. What tax do I have to pay?

There isn’t a quick, one-size-fits-all answer to this because it differs greatly based on your business structure and the tax rates you’re legally obligated to pay, and the type of business you operate in.

We usually recommend that our clients save roughly 20-25% of their revenue to pay for tax on income and GST, Accident Compensation Corporation (ACC) levies , and any small surprise throughout the year.

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

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

It is possible to register for GST on your own if you’re expecting to cross the threshold or engage in an activity where GST includes in your industry prices as a norm.

Q. Do I need to perform an inventory?

The simple conclusion is that yes. There is an exemption which allows those with low values of stock to just guess the quantity they hold. However, if you’re operating a business that sells products, you should be aware of the number of items are available to sell.

This process also identifies SLOBS (slow-moving and out-of-date stocks) to allow you to clear it and not order it again, improving the flow of cash.

Q. Can I do my EOFY taxes myself?

Yes, you can, but will you do it right? Today’s software can make it simple to track a profit and loss, and to file a tax return with IRS. It doesn’t inform you what you may and aren’t claiming, and does not examine your overall financial position.

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