The most popular EOFY questions, answered
Taxes may be one of two things that are certain in this world but that doesn’t mean there is never a certainty about them.
The approaching closing of the financial year (EOFY) will mean that numerous small business owners will be enlisting the assistance of a professional accountant to make sure all their financial affairs are in good working order. To help you make most of the time you spend with them, we’ve talked with two top small business accountants who’ve shared their most common queries regarding EOFY with their clients in order to help you get an advantage.
Q. How do I claim my car?
There are many ways to do it. One method is to claim it as the kilometre allowance, which covers the expense for your business and does not have income ramifications for you as an individual.
There are requirements for a logbook. However, if there is an inventory of your events and actions via your email, it could be sufficient to justify your claim.
Q. I’ve earned an amount of money. Would it be worth purchasing a car 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 don’t get a real benefit from buying a car near the end of your year as a trader. It is better to consider your cash flow prior to the time of year’s beginning to maximize your allowance for depreciation as well as any interest.
Q. I’ve got no cash. How do I be able to pay for my tax bills?
It is necessary to agree to some type of payment agreement. There are a variety of methods to achieve this. Contact the tax department to create a payment plan but interest is charged and there are penalties when you don’t make your payment.
Another option is that you may approach companies offering tax pooling. They’re able to pay for your tax payments by pooling them and the interest rate can be much lower than taxes paid by tax departments. Additionally, it’s more flexible.
A small-business loan is another effective option.
Q. What tax do I be required to pay?
There is no simple solution that is universally applicable because it differs greatly in relation to the business structure you have, the taxes 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 cover income tax or GST Accident Compensation Corporation (ACC) levies and any little surprises during the year.
Q. Should I be GST-registered for the coming year?
The answer is different for each business owner based on the type of business, the target market and turnover.
It is possible to register for GST on your own in the event that you’re planning to cross the threshold or are engaged in any activity where GST includes in your industry prices in the normal course.
Q. Do I have to conduct a stocktake?
The simple solution is yes. There’s an exemption that permits those with lower values of inventory to guess the quantity they have on hand. If you’re operating a business that sells products, it is important to know exactly how many things you have to sell.
This method also detects SLOBS (slow-moving and out-of-date stocks) so you can clear it , and never purchase it in the future, thereby improving your cash flow.
Q. Can I do my EOFY taxes myself?
You can certainly do it but can you do it correctly? The software available today can make it simple to track profits and losses, and submit a tax return to Tax Department. However, it does not tell the tax benefits you cannot claim, and does not look at your overall financial position.
Want to get it right this tax season? Consult your accountant about getting all the necessary boxes checked.
