The most common end of financial year questions, answered

Taxes are perhaps one of the two most important things in the world of finance however that doesn’t mean there is always certainty around them.

The imminent final year of financial reporting (EOFY) means most small-scale business owners will seek the assistance of a professional accountant to ensure that they have their finances in the right place. To make the most of your time together, we’ve talked to two top small-business accountants who shared their most common client EOFY concerns and give you an early start.

Q. How do I claim my car?

There’s more than one way. One method would be to claim it as an allowance for kilometres – which covers the expense to your business , and does not impact your income for the individual.

There are requirements for the logbook. If you do have an inventory of your events as well as your movements via email, that could suffice to prove your claim.

Q. I’ve been making a fair amount of money. Should I consider buying a vehicle at the end of the year to reduce tax?

When you purchase a vehicle, the decision should be about cash flow instead of tax. There isn’t any real benefit from buying a car near the end of your year as a trader. You’re better off considering your cash flow at beginning of the year to maximize your allowance for depreciation as well as any interest.

Q. I’ve got no cash. How am I going to cover my taxes?

It is necessary to agree to some type of arrangement for payment. There are a few ways to do that. You can reach out to the tax department and arrange a payment plan however, interest will be charged and there are penalties for late payments.

There is another option: you might approach businesses offering tax pooling. They’re able fund your tax payment by pooling them and the interest rates are usually a lot less than those offered by the tax office. It’s also a lot more flexible.

A small business loan can be a beneficial alternative.

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

There isn’t a quick, one-size-fits-all answer to this because it differs greatly in relation to the business structure you have and the tax rates you’re paying and the sector that you are in.

We generally recommend that clients save around 20-25% of their annual turnover to pay for tax on income as well as GST, Accident Compensation Corporation (ACC) levies , and any small surprise throughout the year.

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

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

You are able to register on your own in the event that you’re planning to cross the threshold or are undertaking an activity in which GST includes in the industry prices as a norm.

Q. Do I have to conduct a stocktake?

The short solution is yes. There is an exemption which permits those with lower values of inventory to guess the quantity they have available. However, if you’re in the business of selling things, it’s important to know precisely how many things you have to sell.

The process also flags SLOBS (slow-moving and obsolete stocks) and allows you to get rid of it , and never purchase it in the future, thereby improving the flow of cash.

Q. Can I do my EOFY taxes myself?

Yes, you can, but will you do it right? The software available today lets you easily track a profit and loss, and file a return with Tax Department. It doesn’t inform you what you can and can’t claim, and it isn’t able to take a review of your financial position.

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