Your most popular EOFY questions, and answers

Taxes may be one of the two most important things in the world of finance however it doesn’t mean that there is any guarantee that they will be paid.

The approaching final year of financial reporting (EOFY) will mean that most small-scale business owners will be enlisting the help of a professional accountant to ensure that their affairs are in good working order. To help you make most of the time you spend with them, we’ve talked to two top small-business accountants, who have provided their most frequently asked client EOFY concerns and give you an idea of what to expect.

Q. What can I do to claim my car?

There’s many ways to. One way to do it would be to claim it as a kilometre allowance – that covers the expense to your company and doesn’t have any income implications for individuals.

There are some requirements for the keeping of a logbook. However, if you have the log of your meetings as well as your movements via email, that can be sufficient to justify your claim.

Q. I’ve been earning an amount of money. Do I need to buy a car at the end of the calendar year to lower tax?

When you buy a vehicle your decision should be about cash flow and not tax. There isn’t any real advantage by purchasing a vehicle near the end of the year you’ve been trading. You should consider your cash flow prior to the starting of your year to maximize the amount of depreciation allowance and any interest.

Q. I’ve got no cash. How do I make my payment for tax?

You’ll have to enter into some kind of arrangement to pay. There are a few ways to go about it. You can call the tax department and arrange a payment plan but you will be charged interest and you will be penalized in the event of a late payment.

Another option is that you can approach companies that offer tax pooling. They’re able to fund your tax payment via a pooling agreement and the interest rate is often significantly lower than those offered by the tax office. They are also much more flexible.

A small-business loan is another helpful option.

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

There is no simple, universal solution to this as it varies wildly depending on the structure of your business, the taxes you are required to pay and the field that you are in.

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

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

Also, the answer will differ for each business owner depending on the type of business, the target market and turnover.

You can voluntarily register in the event that you’re planning to cross the threshold or are engaged in any activity where GST includes in the industry prices as a norm.

Q. Do I need to do a stocktake?

The simple answer is yes. There is an exemption which lets those with low valuations of stock to simply estimate the amount of stock they hold. However, if you’re operating a business that sells things, it’s important to be aware of the number of items you have on hand to sell.

This also helps identify SLOBS (slow-moving and obsolete inventory) so you can clear it , and never purchase it again, improving the flow of cash.

Q. Can I do my EOFY taxes myself?

Of course you can however, how do you go about doing it right? Today’s software lets you easily track profits and losses, and to file a tax return with Tax Department. However, it does not tell you what you can and can’t claim, and it does not take a deeper look at your overall financial position.

Do you want to be sure you are doing it right this tax season? Consult your accountant about making sure you’ve checked all the right boxes.