Your most popular end of financial year questions, answered

Taxes could be one of the two most important things in life but it doesn’t mean that there is ever a guarantee about them.

The imminent final year of financial reporting (EOFY) will mean that many small business owners will seek the services of a professional accountant to ensure their affairs are in the right place. To help you make most of your time with them, we’ve talked to two top small-business accountants who have provided their most frequently asked EOFY questions from clients, so you can get an early start.

Q. How can I claim for my car?

There’s many ways to. One option would be to claim it on a kilometre allowance – that is a reimbursement to your business and doesn’t have any income implications for your personal income.

There are requirements for an account book. However, if there is the log of your meetings and actions via your email, it could be enough to back up your claim.

Q. I’ve earned a fair amount of money. Would it be worth purchasing an automobile at the close of the year to reduce tax?

When you are buying a car it should be about cash flow and not tax. You’ll not gain any advantage by purchasing a vehicle towards the close of the year you’ve been trading. You’re better off considering your cash flow at time of year’s beginning in order to maximize the amount of depreciation allowance and any interest.

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

It is necessary to agree to some type of arrangement for payment. There are many methods to achieve this. You can reach out to the tax department and arrange a payment plan but you will be charged interest and you will be penalized when you don’t make your payment.

You could approach businesses that provide tax pooling. They can fund your tax bills through a pooling arrangement and the interest rate can be a lot less than taxes paid by tax departments. It’s also a lot more flexible.

A small business loan is a helpful option.

Q. What tax do I be required to pay?

There is no simple, one-size-fits-all answer to this because it is wildly different depending on the structure of your business as well as the taxes you’re paying and the sector that you are in.

We generally recommend that clients save around 20-25% of their earnings to cover income tax as well as GST, Accident Compensation Corporation (ACC) taxes and any other little surprises all through the year.

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

It is true that the answer varies for each business owner based on their industry, the market they want to target and turnover.

You can voluntarily register when you’re likely to exceed the threshold, or are engaging in an activity where GST includes in your industry costs as a standard.

Q. Do I need to perform a stocktake?

The short response is yes. There’s an exemption that allows those with low values of stock to just make an estimate of the inventory they have on hand. If you’re operating a business that sells things, it’s important to be aware of the number of things you have to sell.

This also helps identify SLOBS (slow-moving and obsolete stock) to allow you to clear it and not order it once more, which will improve the flow of cash.

Q. Can I do my EOFY taxes myself?

Of course you can however, how do you go about doing it correctly? Today’s software can make it simple to track an income and loss and to file a tax return with Tax Department. But it doesn’t tell the tax benefits you cannot claim, and isn’t able to take a analysis of your overall financial position.

Do you want to do it right this tax time? Consult your accountant about making sure you’ve checked all the right boxes.