Your most frequent EOFY questions, and answers

Taxes could be one of the only two guarantees in this world however this doesn’t mean that there’s always certainty around them.

The looming approach of the final year of financial reporting (EOFY) implies that numerous small business owners will seek the help of a professional accountant to ensure they have their finances in the right place. In order to help you make the most of your time together, we’ve talked to two leading small business accountants who provided their most frequently asked EOFY questions from clients in order to help you get a head-start.

Q. How can I claim my vehicle?

There’s more than one method. One way would be to claim it on an allowance for mileage – this covers the expense to your business and is not a tax deductible benefit for the individual.

There are requirements for a logbook. However, if you have a record of your meetings and movements through your email, that can be sufficient to justify your claim.

Q. I’ve earned a fair amount of money. Do I need to buy an automobile at the end of the calendar year to lower tax?

When you purchase a vehicle it should be about cash flow and not tax. You don’t get a real benefit from buying a car just at the end of the trading year. It is better to consider your cash flow prior to the start of each year to maximize your allowance for depreciation as well as any interest.

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

You’ll need to enter into some kind of payment agreement. There are several methods to achieve this. Contact the tax department and create a payment plan but you will be charged interest as well as penalties for late payments.

The alternative is that you could approach businesses that provide tax pooling. They’re able fund your tax payment through a pooling arrangement , and the interest rates are usually much lower than taxes paid by tax departments. Additionally, it’s more flexible.

A small business loan can be a useful option.

Q. What tax do I have to pay?

There is no simple, one-size-fits-all answer to this because it differs greatly in relation to the business structure you have and the tax you are required to pay and the field you operate in.

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

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

Also, the answer will differ for every business owner based on their industry, the market they want to target and turnover.

You can voluntarily register for GST if you’re anticipating to reach the threshold or are undertaking an activity where GST will be contained in the industry prices as a rule.

Q. Do I have to conduct an inventory?

The short answer is yes. There is an exemption which allows people with low value of inventory to guess the quantity they have in their inventory. However, if you’re operating a business that sells things, it’s important to know exactly how many things you have to sell.

This process also identifies SLOBS (slow-moving and obsolete stocks) which allows you to dispose of it without having to purchase it once more, which will improve your cash flow.

Q. Can I do my EOFY taxes myself?

You can certainly do it however, how do you go about doing it correctly? Today’s software can make it simple to track profits and losses, and file a return with your tax authorities. However, it doesn’t tell the tax benefits you aren’t claiming, and does not take a deeper examine your overall financial position.

Do you want to do it right this tax time? Discuss with your accountant the possibility of getting all the necessary boxes checked.