Your most popular end of financial year questions, and answers

Taxes could be one of the two most important things in this world but this doesn’t mean there’s always certainty around them.

The approaching end of financial year (EOFY) will mean that numerous small business owners will be seeking the services of a professional accountant to ensure that their affairs are in good working order. To make the most of your time with them, we’ve spoken with two top small business accountants who provided their most frequently asked client EOFY concerns in order to help you get an early start.

Q. What can I do to claim my car?

There’s many ways to. One way to do it is to claim it as an allowance for kilometres – which will reimburse the cost for your business and does not have income ramifications for your personal income.

There are some requirements for an account book. If you do have the log of your meetings as well as your movements via email, that can be sufficient to justify your claim.

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

If you decide to purchase a car it should be about cash flow instead of tax. You’ll not gain any advantage by purchasing a vehicle just at the end of your trading year. You’re better off considering your cash flow at the starting of your year in order to maximize the amount of depreciation allowance and interest.

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

It is necessary to sign a type of arrangement for payment. There are many options to accomplish this. Contact the tax department to arrange a payment plan but interest is charged and penalties are imposed for late payments.

The alternative is that you can approach companies that offer tax pooling. They’re able fund tax obligations through a pooling arrangement and the interest rate is usually significantly lower than that of the department responsible for tax. Additionally, it’s more flexible.

A small-business loan is another helpful alternative.

Q. How much tax will I be required to pay?

There is no simple, universal solution to this because it is wildly different in relation to the business structure you have and the tax you are paying and the sector you work in.

We generally recommend that clients save roughly 20-25% of their revenue to cover tax on income and GST, Accident Compensation Corporation (ACC) taxes and any other little surprises throughout the year.

Q. Do I need to 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 can voluntarily register in the event that you’re planning to cross the threshold or are engaged in an activity where GST can be included into industry prices in the normal course.

Q. Do I require an inventory?

The short answer is yes. There’s an exemption that lets those with low valuations of stock to simply make an estimate of the inventory they have in their inventory. However, if you are in the business of selling products, it is important to know precisely how many items are available to sell.

The process also flags SLOBS (slow-moving and out-of-date stocks) and allows you to get rid of it without having to purchase it again, thus improving your cash flow.

Q. Can I do my EOFY taxes myself?

Yes, you can however, how do you go about doing it correctly? Software available today allows you to easily run a profit and loss, and to file a tax return with IRS. It doesn’t inform the tax benefits you cannot claim, and does not take a deeper review of your financial situation.

Do you want to be sure you are doing it right this tax season? Consult your accountant about checking all the boxes.