The most popular EOFY questions, answered

Taxes may be one of the two most important things in the world, but this doesn’t mean there’s always certainty around them.

The imminent closing of the financial year (EOFY) means most small-scale business owners will seek the help of a professional accountant to make sure all their financial affairs are in the right place. In order to help you make the most of the time you spend working with them, we’ve spoken with two top small business accountants who discussed their most frequent EOFY questions from clients to give you a head-start.

Q. How can I claim my vehicle?

There are many ways to do it. One method is to claim it on a kilometre allowance – that is a reimbursement for your business and doesn’t have any income implications for the individual.

There are certain requirements for the keeping of a logbook. However, if there is an inventory of your events and movements through your email, that can be enough to back up your claim.

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

When you buy a vehicle it should be about cash flow and not tax. You won’t gain a significant benefit by buying a car just at the end of the year you’ve been trading. It is better to consider your cash flow prior to the starting of your year in order to increase the depreciation allowance and interest.

Q. I’ve got no cash. How do I cover my taxes?

You’re going to have to sign a type of arrangement to pay. There are a few ways to do that. You can contact the tax department to arrange a payment plan but the 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 your tax payment through a pooling arrangement and the interest rate can be lower than that of that of the department responsible for tax. It’s also more flexible.

A small business loan is another beneficial option.

Q. What is the amount of tax I have to pay?

There is no easy, one-size-fits-all answer to this as it varies wildly depending on the structure of your business, the taxes you are registered for and the industry you work in.

We usually recommend that our clients set aside between 20 and 25 percent of their revenue to with taxation, GST, Accident Compensation Corporation (ACC) levies , and any small surprise all through the year.

Q. Do I need to be GST registered for the coming year?

It is true that the answer varies for every business owner based on the industry, market and turnover.

It is possible to register for GST on your own when you’re likely to exceed the threshold or engage in an activity that requires GST can be included into industry prices as a rule.

Q. Do I have to conduct a stocktake?

The simple answer is yes. There’s an exemption that permits those with lower values of stock to just make an estimate of the inventory they have available. However, if you’re operating a business that sells things, it’s important to be aware of the number of items you have in your inventory to sell.

This method also detects SLOBS (slow-moving and obsolete stocks) so you can clear the item and not purchase 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 makes it easy to run the numbers of a profit and loss and file a return with your tax authorities. But it doesn’t tell you what you are allowed and should not claim, and does not analysis of your overall financial situation.

Do you want to do it right this tax season? Discuss with your accountant the possibility of checking all the boxes.