The most popular EOFY questions, answered

Taxes could be one of the only two guarantees in life However, that doesn’t mean there is always certainty around them.

The approaching closing of the financial year (EOFY) implies that the majority of small-business owners will be enlisting the services of a professional accountant to make sure they have their finances in good working order. To help you make the most of the time you spend with them, we’ve spoken with two top small business accountants who’ve discussed their most frequent questions about EOFY from their clients to give you an early start.

Q. How can I claim for my car?

There are many ways to do it. One method is to claim it on an allowance for kilometres – which is a reimbursement to your business and does not have income ramifications for you as an individual.

There are certain requirements for a logbook. If you do have an inventory of your events and activities through your email, it could be sufficient to support your claim.

Q. I’ve been earning quite a bit of money. Would it be worth purchasing a vehicle 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’ll not gain any advantage from purchasing a vehicle just at the end of the year you’ve been trading. You should consider your cash flow at start of each year in order to maximize your allowance for depreciation and any interest.

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

It is necessary to sign some sort of payment agreement. There are a variety of ways to do that. You can contact the tax department and create a payment plan however, interest will be charged and penalties are imposed in the event of a late payment.

Another option is that you might approach businesses offering tax pooling. They’re able to pay for your tax bills via a pooling agreement and the interest rates are usually significantly lower than those offered by the tax office. Additionally, it’s more flexible.

A small business loan is a useful option.

Q. What tax do I have to pay?

There is no simple answer that can be standardized as it varies wildly depending on the structure of your business and the tax you are registered for and the industry you work in.

We generally recommend that clients set aside between 20 and 25 percent of their turnover to help cover income tax or GST Accident Compensation Corporation (ACC) levies , and any small surprise throughout the year.

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

Also, the answer will differ for each business owner , based on the industry, market and turnover.

You are free to sign up for GST if you’re anticipating to reach the threshold or are engaged in an activity in which GST can be included into industry prices as a rule.

Q. Do I have to conduct an inventory?

The short answer is yes. There’s an exemption that allows those with low values of stock to just estimate the stock they have available. If you’re in the business of selling items, it’s smart to know precisely how many items you have on hand to sell.

This method also detects SLOBS (slow-moving and obsolete stocks) to allow you to clear it , and never purchase it in the future, thereby improving the flow of cash.

Q. Can I do my EOFY taxes myself?

Sure, you can, but will you do it correctly? The software available today makes it easy to run a profit and loss, and to file a tax return with your tax authorities. However, it does not tell you what you can and aren’t claiming, and does not review of your financial situation.

Do you want to do it right this tax season? Consult your accountant about ticking all the right boxes.