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.
Start by Getting Your Receipts and Invoices Organised
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:
- Sales, interest and other revenue (such as royalties)
- Wages
- Payments for services
- Running costs like utilities, fuel, rent and license fees
- Equipment costs, including outright or lease payments and maintenance costs
- Tax including fringe benefits tax (FBT)
SEE ALSO: Business Goals: Is it Time for a Mid-Year Check-In?
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.
What To Try
- J.Burrows Document Box A4 PP Elastic Closure Blue
- J.Burrows Document Box A4 Clip Closure Purple
- Keji Expanding File Foolscap 19 Pocket Red
- Colourhide Zip It Expanding File Watermelon
- Marbig Strong Archive Box 3 Pack
- Marbig Archive Box Mid Palm
Use Accounting Software to Streamline Record Keeping
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. (Try outsourcing data entry to save time and stress.) This will make it easier to calculate your GST credits and what you’ll owe at BAS time.
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.
What To Try
Be Aware of Your BAS Due Date
When you file your BAS 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.
When to Complete Your BAS
Work Out What GST Credits You Can Claim
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.
Set Up a Separate Bank Account [ITALICS] Just for Tax Instalments
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.
Want to Know More?
These websites have handy info on how to prepare your BAS and other tax obligations
- ATO small business newsroom publishes updates about tax rule changes plus useful guides and Q&As to help you stay on top of Australian tax rules.
- ASIC’s MoneySmart income tax section gives an overview of how to work out how much tax you’ll pay and includes an income calculator for an estimate.
- The government’s business.gov.au’s Register for goods and services tax leads you through the GST registration process and if you already have an ABN, you can register online.
- Business.gov.au’s Income tax for business explains how income tax works and includes assessable income, deductions and PAYG instalments. It also includes an online service for tax help after hours.
* This is general information only and does not constitute taxation or legal advice. Other requirements under the tax law apply. Seek professional tax and/or legal advice to determine whether you are eligible to claim a deduction for any purchases.
