The most frequent EOFY questions, answered
Taxes may be one of two things that are certain in the world however it doesn’t mean that there is any guarantee that they will be paid.
The approaching close of the financial year (EOFY) means many small business owners will be enlisting the assistance of a professional accountant to ensure your affairs are in good order. To make the most of your time with them, we’ve spoken to two top small-business accountants, who have discussed their most frequent EOFY questions from clients to give you a head-start.
Q. How can I claim my vehicle?
There’s more than one method. One method would be to claim it on a kilometre allowance – that covers the expense to your company and does not impact your income for you as an individual.
There are some requirements for a logbook. If you do have a record of your meetings and activities through your email, it could suffice to prove your claim.
Q. I’ve earned a fair amount of money. Should I consider buying a vehicle at the end of the year to save tax?
If you decide to purchase a car it should be about cash flow instead of tax. There isn’t any real benefit from buying a car towards the close of the trading year. You should consider your cash flow prior to the beginning of the year 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?
You’ll have to sign a type of arrangement to pay. There are many ways to go about it. You can contact the tax department and establish a payment schedule but interest is charged as well as penalties for late payments.
There is another option: you can approach companies that offer tax pooling. They’re able to fund tax obligations by pooling them and the interest rate can be a lot less than the tax department. They are also much more flexible.
A small-business loan is another useful alternative.
Q. What is the amount of tax I have to pay?
There is no quick solution that is universally applicable because it is wildly different based on your business structure, the taxes you are paying and the sector you work in.
We usually recommend that our clients save between 20 and 25% of their turnover to help cover tax on income and GST, Accident Compensation Corporation (ACC) charges and other small surprises during the year.
Q. Do I need to be GST registered for the coming year?
Again, the answer varies for each business owner , based on industry, target market and turnover.
You can voluntarily register for GST if you’re anticipating to reach the threshold or engage in an activity in which GST is included in industry prices in the normal course.
Q. Do I need to perform a stocktake?
The short solution is yes. There’s an exemption that permits those with lower values of stock to just estimate the amount of stock they have on hand. But if you’re operating a business that sells products, it is important to know precisely how many items you have in your inventory to sell.
This process also identifies SLOBS (slow-moving and out-of-date stocks) and allows you to get rid of it , and never purchase it once more, which will improve your cash flow.
Q. Can I do my EOFY taxes myself?
Sure, you can but can you do it correctly? Software available today lets you easily track a profit and loss, and then file a tax return with Tax Department. However, it doesn’t tell you what you may and aren’t claiming, and does not take a deeper analysis of your overall financial position.
Do you want to do it right this tax season? Speak to your accountant about ticking all the right boxes.
