The quarterly BAS deadline is fast approaching, with the next lodgement due on February 28.
Business Activity Statements (BAS) are a vital part of managing your business’s tax obligations. Lodging your BAS accurately and on time is crucial to avoid potential penalties and to maintain proper oversight of the true financial position of your business.
While the process may seem daunting, following a structured approach can make it simpler. In this article, we’ll outline a few basics to help take the stress out of BAS.
Familiarise yourself with the specific BAS reporting requirements for your business. Different businesses have varying obligations, and understanding what needs to be reported will help you gather the necessary information. Common components of a BAS include Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, and other relevant taxes. Stay updated on any changes to tax laws that may impact your reporting obligations.
Before diving into the BAS lodgement process, ensure that your financial records are well-organised (ideally this would be an ongoing process as part of managing your finances). This includes keeping track of all income and expenses, maintaining a detailed record of your transactions, and reconciling your accounts regularly.
Implementing reliable accounting software such as Xero can significantly simplify the BAS lodgement process. Choose a software solution that integrates seamlessly with your business operations and allows you to generate accurate reports. Many accounting software options automate the calculation of GST and other taxes, reducing the likelihood of errors in your BAS submissions.
Conduct regular reviews of your financial data to identify and correct any discrepancies. Reconcile your bank statements, sales, and purchase records to ensure accuracy in your BAS reports. Regular reviews not only help in maintaining clean and accurate financial records but also make the BAS lodgement process smoother, as you won’t be scrambling to fix errors at the last minute.
The distinction between cash and accruals can significantly influence how businesses report GST. Under the cash basis, GST is recognised only when actual cash transactions occur, either when payments are received from customers or made to suppliers. This method provides a clear snapshot of real-time cash flow but may not accurately reflect business activities.
On the other hand, the accrual basis recognises GST when transactions are incurred, irrespective of the timing of cash movements. This method offers a more comprehensive view of a business’s financial health, reflecting revenue and expenses when they are earned or incurred. While accrual accounting provides a more accurate representation of a company’s overall performance, it can introduce timing differences between when GST is recognised and when cash changes hands.
It’s always best to seek professional advice when working out which method will work best for your business.
When it comes to BAS, the temptation to put your head in the sand is very real. We understand: you have a business to run, and BAS is a recurring administrative burden on business owners who are already short of time. Yet ignoring BAS isn’t a solution, especially considering that the ATO has announced that it will be cracking down on outstanding lodgements. Make it a habit to stay on top of your accounting obligations. Outsourcing your accounting and bookkeeping can help relieve some of that BAS-related stress. allowing experts to handle those pesky numbers while you run the business. At Retinue we process and lodge BAS on behalf of our clients.
However you choose to manage your BAS, it’s best to make it a standard part of your business operations so it doesn’t become a headache at lodgement time – and a potential red flag to the ATO.
Battling your BAS? Contact Retinue to find out how we can help with your lodgements.
*Retinue’s (ABN 66 658 618 449) payroll service includes the processing of hours and wages rates provided by you. We do not determine award rates for your employees or provide advice on the correct employment status of your employees. It is your responsibility to ensure that your employees are paid correctly and we recommend obtaining advice from specialised employment relations experts.
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