Small business owners are often overwhelmed with tax obligations. Understanding your GST obligations will make a big difference in how you feel about the tax. It may be hard at first, but knowing when the next BAS is due, will help you manage your cash flow.
Every business owner should know that they can get help with their tax bills when it is needed.
What is a Business Activity Statement
First of all, a Business Activity Statement, or BAS, is a form your business needs to report to ATO about your income and expenses for a specific period. The report is used to work out GST, PAYG and other taxes to determine whether you owe or have a refund from ATO.
It’s important that you lodge on time because penalties and interest may apply if you missed the due date. Here’s how they apply the penalties.
When do you need to submit your BAS – Due Dates
Small businesses generally fall into one of the two following reporting periods.
Quarterly – lodgement when your GST turnover is under $20 million. The due date is on the 28th day of the following month, Q2 has a one month extension.
Q1. Jul – Sep 28 Oct
Q2. Oct – Dec 28 Feb
Q3. Jan – Mar 28 Apr
Q4. Apr – Jun 28 Jul
Annually – if your GST turnover is under $75,000 ($150,000 for not-for-profit bodies) you’ve an option to register for GST and lodge your BAS on the 31st of October along with your income tax return. If you’re under the threshold but not registered then you must register as soon as your turnover of the current month plus the previous 11 months is at or above the threshold.
If you use a BAS agent, generally there is an extension on the due dates.
How to complete and submit BAS
What you need to report in the BAS depends on the nature of your business. Here are some of the main elements making up the BAS for a period.
GST accounting method. You need to select whether you are reporting on Cash or Accrual Basis.
GST on sales and purchases. You need to report the amount of GST you collected from customers, and how much GST was paid to suppliers.
PAYG tax withheld. You are required to report how much tax you withheld from wages paid to employees, directors and related parties during the period.
PAYG income tax instalment. This is the instalment tax towards the year end tax that will be accounted for when lodging tax return.
There are several ways to lodge your Activity Statements
For sole traders, you can lodge by linking ATO online services to your myGov account. Here’s where to create your account, myGov.
Online Services for Business
To use this method you need to take some extra steps by creating your myGovID and connect it to your myGov account. Go to https://www.mygovid.gov.au/set-up for instructions.
You can use this login to manage most of your tax details.
Directly via Accounting System
E.g Xero allows you to connect to ATO, complete the statement and lodge within the software. The activity statement data will be sent to the ATO and you make payment to them.
Yes, the regular snail mail is another option for posting your completed BAS to ATO. The last one we posted was many moons ago.
Tax or BAS Agent
This is the most efficient method for most businesses, letting your registered agent lodge and pay on your behalf. You still can see your business information via your account mentioned above.
Making changes to lodged activity statement
What if there was an error or an adjustment needed on your lodged statement, what should you do then?
Examples for changes are:
An incorrect tax code was assigned to a transaction. A taxable sale or purchase was entered as GST-free or vice versa.
You inadvertently left out a business expense in your previous BAS.
How you make the correction would depend on what you’d like to change, as per ATO’s guidelines.
Once completed and submitted your BAS, ensure all copies of supporting documents (such as receipts) are kept safe.
Your BAS obligations are another admin part of your business that shouldn’t be a stressful task. The key is to have the accounting system accurate and up to date so you can meet deadlines with ease.
If you’re not sure how, don’t worry – it’s what OnBookkeeping does best! We’ll help you fulfil your BAS obligations by providing expert guidance on everything from annual compliance tasks like GST reporting, quarterly tax payments, through to fortnightly payroll services or year-end financial reports. Contact us today for more information about how we can make managing your business easier than ever before.
We can answer any questions you have about lodging your BAS so contact us today!