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.
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)
- 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)
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.
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). This will make it easier to calculate your GST credits and what you’ll owe at BAS time.
For organising receipts, there are many receipt management tools you can try which can take up to 50 paper and 50 digital receipts and store them until you’re ready for data entry. Outsourcing data entry could be a huge time and stress saver.
Online accounting software systems 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.
Be aware of your BAS due date
When you file your BAS, it will depend on the size of your business. Larger businesses (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 could 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.
Want to know more?
These websites have handy info on how to prepare your BAS and other tax obligations. You can also speak with your accountant or taxation advisor.
- 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
- 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
If you’re self-employed pre end of financial year can be a good time to look at your business and personal finances. You may also be able to refinance some or all of your business debts into your home loan and save on interest costs – if that is the best option for you and your business.
Check out our borrower guide for the self-employed
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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice. This article should not be considered taxation or financial advice. LJ Hooker Home Loans are not registered taxation agents or accountants.