The most frequent end of financial year questions, and answers

Taxes could be one of the only two guarantees in the world of finance, but that doesn’t mean there is any guarantee that they will be paid.

The looming approach of the end of financial year (EOFY) means most small-scale business owners will seek the services of a professional accountant to ensure that your affairs are in good working order. To help you make most of the time you spend working with them, we’ve spoken to two renowned small business accountants who provided their most frequently asked client EOFY concerns, so you can get an idea of what to expect.

Q. What can I do to claim my car?

There are many ways to do it. One option is to claim it as an allowance for kilometres – which covers the expense to your business and is not a tax deductible benefit for the individual.

There are requirements for an account book. If you do have a record of your meetings and movements through your email, that could be sufficient to support your claim.

Q. I’ve earned a fair amount of money. Is it worth buying a vehicle at the end of the year to save tax?

When you purchase a vehicle you should make the purchase about cash flow instead of tax. You’ll not gain any benefit by buying a car near the end of your year as a trader. It is better to consider your cash flow prior to the starting of your year to maximize your allowance for depreciation as well as any interest.

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

You’ll need to sign a type of arrangement to pay. There are a variety of ways to do that. You can reach out to the tax department to create a payment plan however, interest will be charged and you will be penalized if you miss your payment.

The alternative is that you may approach companies offering tax pooling. They’re able fund tax obligations by pooling them and the interest rates are usually significantly lower than taxes paid by tax departments. It’s also a lot more flexible.

A small business loan is a beneficial option.

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

There is no simple answer that can be standardized because it differs greatly depending on the structure of your business and the tax you are required to pay and the field you work in.

We usually recommend that our clients set aside between 20 and 25 percent of their annual turnover to with taxation as well as GST, Accident Compensation Corporation (ACC) charges and other small surprises throughout the year.

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

The answer is different for each business owner , based on their industry, the market they want to target 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 where GST will be contained in industry prices as a norm.

Q. Do I need to perform a stocktake?

The simple conclusion is that yes. There is an exemption which permits those with lower values of inventory to estimate the amount of stock they hold. If you’re in the business of selling items, it’s smart to know exactly how many items are available to sell.

This also helps identify SLOBS (slow-moving and obsolete inventory) and allows you to get rid of it without having to purchase it once more, which will improve your cash flow.

Q. Can I do my EOFY taxes myself?

You can certainly do it however, can you do it right? Today’s software can make it simple to track profits and losses, and to file a tax return with your tax authorities. However, it doesn’t tell you what you are allowed and can’t claim, and it doesn’t take a closer review of your financial situation.

Are you looking to make sure that everything is in order this tax season? Speak to your accountant about ticking all the right boxes.