Business Activity Statements (BAS) for Dummies 

When it comes to navigating the world of business and taxes, it’s important to stay on top of your business activity statement, or BAS. For many small business owners in Australia, this can be a particularly daunting task. BAS is often seen as a challenging and intricate part of the taxation process, but with a few simple tips, you won’t feel like such a dummy, and you will keep your business compliant with the law. Let’s start with the basics: 

What is a Business Activity Statement (BAS)? 

A Business Activity Statement (BAS) is a report that businesses in Australia are required to submit to the ATO. It contains information on the various taxes that a business is liable to pay, including: 

• Goods and Services Tax (GST) 

• Pay-As-You-Go (PAYG) income tax 

• PAYG instalments 

• Fringe benefits tax (FBT) 

It is a legal requirement for all businesses that are registered for GST, which is all small businesses with over $75,000 of revenue (net of GST) or over $150,000 (net of GST) for non-profit organisations. 

When do I have to lodge my BAS? 

Assuming your small business has GST turnover of less than $20m, your BAS is submitted every quarter on the following dates: 

• January to March quarter – 28 April 

• April to June quarter – 28 July 

• July to September quarter – 28 October 

• October to December quarter – 28 February 

Notice that you are given an extra month to file the December quarter BAS, a bit of Christmas cheer from the ATO! 

Any amount payable, as summarised on your BAS, is due for payment on these dates as well. It is important that you lodge your BAS on time even if you cannot afford to pay the amount due at that time. Your accountant can help you arrange a payment plan with the ATO if needed. 

How do I lodge my BAS? 

There are several options for lodging your BAS: 

• By mail – complete the paper form BAS and return in the pre-paid envelope 

• Online – either through the secure ATO website at Online Services for Business if you are registered, sole traders can access online services through myGov, or through your accounting software e.g. Xero or MYOB if you have linked this to the ATO already 

• Tax agent or BAS agent – if this all feels a bit too complicated and you are not sure about setting up online registrations, you can use a tax agent or BAS agent to lodge on your behalf 

What numbers do I need to include on my BAS? 

The BAS process involves you reporting your income and expenses to the ATO, which is then used to calculate the amount of tax you owe. Here is a breakdown of how each section works: 

GST Section: The GST section requires businesses to report their GST sales and purchases, and separately the GST collected and paid on these sales and purchases. 

PAYG Income Tax Section: The PAYG income tax section requires businesses to report their total salaries and wages for the quarter and the amount of tax that they have withheld from their employees’ salaries.  

PAYG Instalments Section: The PAYG instalments section requires businesses to pay a percentage of their expected annual tax liability in advance. The ATO will let you know what percentage rate you should apply to your quarterly total income. 

FBT Section: Finally, the FBT section requires businesses to report their FBT instalment for the quarter and any variations to this based to fringe benefits provided to employees. 

That was the basics which I know is complicated enough. If you are still determined to complete your BAS yourself, then here are some tips that will help. 

Tips for small businesses to manage their BAS more efficiently 

Managing BAS can be a challenging task, particularly for small businesses with limited resources. Here are some tips to help you manage their BAS process and reduce the stress levels each quarter: 

1. Keep Accurate Records 

One of the most critical aspects of managing BAS is keeping accurate records of all income and expenses. This will help you ensure that you are reporting the correct information to the ATO and avoid any potential penalties. Here are some tips for keeping accurate records: 

• Keep all receipts and invoices for purchases and sales for five years 

• Separate business and personal expenses – only claim GST credits on the business portion of purchases 

• Decide whether reporting on a cash basis makes more sense for your business as it will align your business cash flow better to your BAS liabilities 

• Use accounting software to track expenses 

2. Use Accounting Software 

Using accounting software can make managing BAS much easier for small businesses. There are many different accounting software options available, ranging from basic spreadsheets to more advanced software that can automatically generate BAS reports. We recommend Xero for small businesses as it is cloud based, has subscription levels to match your size of business, and has plenty of help options for when you get stuck. 

The advantages of using accounting software are: 

• Streamline record-keeping saving you time and ensuring you do not miss claiming any GST credits 

• Automatically calculates your GST and other taxes which are needed to complete your BAS 

• Generates the BAS reports for you and will even lodge electronically from the software 

3. Plan Ahead 

Planning ahead can help you avoid any last-minute rush to prepare and submit your BAS reports. Remember these important points: 

• Set aside enough time each quarter to prepare your BAS report. You normally have one month after the period end to finalise your report so don’t leave it until the last day 

• Keep track of those important quarterly deadlines 

• Estimate your GST and other tax liabilities in advance and make sure you have put this cash to one side so that you have enough cash to pay the amount due 

4. Set Reminders 

It can be so easy to forget about your BAS obligations, particularly when you are busy running the day-to-day operations. Setting reminders can help you ensure that you submit your BAS reports on time and avoid any potential penalties. Here are some tips for setting reminders: 

• Set up alerts on your phone or computer 

• Use a calendar to mark important quarter end dates 

• Set up automatic reminders in your accounting software 

5. Seek Professional Help 

Managing BAS can be complicated, and it can be challenging for small businesses to navigate the process alone. I have only touched on the basic rules here and it is important that your accountant checks you are doing it right and most importantly that you are not paying too much tax by missing out on key credits and deductions.  

Equally importantly, seeking professional help can help you get back to focusing on what you do best, running a successful small business.  

Conclusion 

BAS is a necessary evil for small businesses in Australia to report and pay various taxes to the ATO. The BAS process can take a lot of time in collating information and making detailed calculations. To manage BAS more efficiently, remember to keep accurate records, use accounting software, plan ahead and set reminders. If all this seems a bit too complicated, don’t be a dummy and  seek professional help from a good accountant who can help you meet your ongoing tax reporting obligations. 

Retinue Accounting helps small businesses with all their bookkeeping, payroll and taxation needs, including Fringe Benefits Tax, for an affordable fixed monthly fee. If you are interested in finding out more about how we can help your business make better decisions, please get in touch. 

Retinue’s 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.