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If you’re registered for GST, you’ll have a regular business activity statement to sort out. Here’s how to get on top of it and make BAS preparation easier.
Let’s start with the basics: what is BAS? It’s an acronym for business activity statement. Whether it’s monthly, quarterly or yearly, every Australian business registered for the goods and services tax (GST) needs to submit a BAS to the Australian Tax Office (ATO).
It’s important to schedule time to complete your BAS because it is not optional. While the ATO says nearly 90% of small business tax is reported and paid voluntarily, it is on the hunt for the other 10% or so, worth $11 billion in lost revenue every year. Failing to lodge on time can cost penalties starting at $210 every 28 days. Who needs that sort of grief? Here are some tips to help make BAS preparation easier every time.
It sounds like simple advice but it’s also the most important: without properly kept records, it’s almost impossible to lodge your BAS with ease. The ATO expects you to account for everything you’ve earned and spent in the business for the past five years; that means all your incomings and outgoing including:
While many transactions are recorded digitally these days, it’s highly likely your business will still receive paper receipts and records. Instead of stuffing them into a drawer, set up a simple document filing system to store them and make BAS preparation easier.
Box files and accordian files are perfect for everyday use. At the very least, start a new box or file for each month or quarter, so you can save time and quickly access all your GST-related records when preparing your BAS.
Archive boxes come into play when you have lots of records and paperwork. Once you've lodged your BAS, the records can go into storage.
Clockwise from bottom left:
Smart software can help you track all your income and expenses by handling a lot of the tedious calculations for you (as long as you enter the data correctly the first time). This will make it easier to calculate your GST credits and what you’ll owe at BAS time.
For organising receipts, try this Receipt Management service which takes up to 50 paper and 50 digital receipts and stores them until you’re ready for data entry. Outsourcing data entry is a huge time and stress saver.
Online accounting software, such as Reckon, can help you manage your accounts, including bills, expenses, quotes, receipts and invoices, as well as stock inventories and payroll. Often, there’s the functionality to transfer or integrate data from other business applications. The bonus? It can save you huge admin time and costs, while giving you a more detailed picture of your business performance.
Big businesses will almost certainly have dedicated internal accounting resources, but small businesses shouldn’t feel they have to do the hard yards themselves. You can outsource record keeping to a professional for a whole year with a Bookkeeping for Sole Traders package. Aimed at sole traders with up to $100,000 annual turnover, the service includes 12 months of bookkeeping, four sets of BAS preparation and lodgement, as well as a company tax return.
When you file your BAS, it will depend on the size of your company. Larger companies (those with a GST turnover of $20 million or more) are expected to lodge monthly but smaller organisations are allowed to lodge quarterly or even annually (see chart below). The ATO may forgive one slip but repeat offenders will be slapped with penalties and interest charges, so make sure you know your BAS due date and get it in on time. An easy way to do this is to schedule a BAS session with your bookkeeper, tax agent or accountant a few days after the cycle ends, so you'll have 2-3 weeks to finalise and lodge your BAS.
21st of the following month
Quarterly – unless the ATO tells you to do it monthly
28th of the month after the quarter ends
31 October — but if you aren’t required to lodge a tax return, it’s due 28 February of the following year
Everyone registered for GST can reduce their BAS payments by claiming GST credits on business-related expenses for any GST included in the price. You’ll need to have good records to prove you’re allowed the credit. Save yourself a mad rush at BAS time by recording GST credits as you earn them into your accounting software. The ATO also has an interactive GST calculation worksheet that can help.
And, if you only do one tax-related thing today, make it this: open a savings account that pays interest (sure, it won’t be much these days, but it’s better than paying admin fees). Park the money you’re likely to need for tax there. Don’t touch the funds until you need to pay tax. Yes, it’s hard to avoid temptation when you’re a bit strapped for cash but you’ll save yourself even more pain down the track. Another option is to ask the ATO to help you set up an automatic deduction of your expected GST and PAYG from the account. If you run into cash flow issues and have trouble covering the whole amount on time, you might be eligible for a payment plan.
These websites have handy info on how to prepare your BAS and other tax obligations.