The most common end of financial year questions, and answers

Taxes could be one of the only two guarantees in the world however this doesn’t mean there’s never a certainty about them.

The imminent close of the financial year (EOFY) will mean that numerous small business owners will be enlisting the services of a professional accountant to make sure they have their finances in order. To help you make the most of the time you spend working with them, we’ve spoken to two top small-business accountants who have discussed their most frequent queries regarding EOFY with their clients to give you an idea of what to expect.

Q. How can I claim my vehicle?

There are many ways to do it. One option would be to claim it as an allowance for kilometres – which covers the expense to your business and does not impact your income for you as an individual.

There are some requirements for an account book. However, if there is an inventory of your events and actions via your email, it could be sufficient to justify your claim.

Q. I’ve been earning an amount of money. Is it worth buying an automobile at the end of the year in order to avoid tax?

When you buy a vehicle you should make the purchase about cash flow, not tax. You don’t get a real benefit by buying a car towards the close of your trading year. It is better to consider your cash flow at the starting of your year in order to maximize the amount of depreciation allowance and any interest.

Q. I’ve got no cash. How am I going to cover my taxes?

You’re going to have to sign a type of arrangement to pay. There are a few options to accomplish this. Contact the tax department to set up a payment plan however, interest will be charged and penalties are imposed for late payments.

There is another option: you could approach businesses that provide tax pooling. They can fund your tax payments by pooling them and the interest rate can be significantly lower than that of the department responsible for tax. They are also much more flexible.

A small-business loan is another effective alternative.

Q. What amount of tax will I have to pay?

There is no simple, one-size-fits-all answer to this since it differs widely according to your business structure, the taxes you are legally obligated to pay, and the type of business that you are in.

We usually recommend that our clients save roughly 20-25% of their turnover to help cover tax on income as well as GST, Accident Compensation Corporation (ACC) levies and any little surprises throughout the year.

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

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

You are able to register on your own when you’re likely to exceed the threshold or engage in an activity in which GST is included in the industry prices as a rule.

Q. Do I need to perform a stocktake?

The simple conclusion is that yes. There’s an exemption that allows those with low values of stock to just estimate the amount of stock they have on hand. But if you’re operating a business that sells products, you should be aware of the number of things you have to sell.

This method also detects SLOBS (slow-moving and obsolete stock) so you can clear the item and not 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 right? Software available today lets you easily track the numbers of a profit and loss and to file a tax return with IRS. It doesn’t inform you what you can and should not claim, and doesn’t take a closer analysis of your overall financial situation.

Want to get it right this tax time? Discuss with your accountant the possibility of ticking all the right boxes.