Decoding BAS: A Simplified Breakdown of Business Activity Statements

By Bottrell Group on April 18, 2023 in Interesting Articles

When establishing a business, it’s important to familiarize yourself with the requirements of completing Business Activity Statements (BAS) with the Australian Taxation Office (ATO). Tax laws and regulations are subject to change, so it’s always best to consult with a qualified professional, such as an accountant or tax agent, or directly with the ATO for up-to-date and specific advice tailored to your business situation. If you are after a Newcastle or Maitland accountant who can provide expert guidance on BAS and other tax-related matters, look no further than Bottrell Accounting, which has offices in both Newcastle and Maitland. The team at Bottrell Accounting has extensive experience in assisting businesses with their accounting and taxation needs, including BAS preparation and lodgment. They can also provide advice on other financial matters such as budgeting, cash flow management, and business planning.

Business Establishment considerations

As part of your business formation, you will need to register for an Australian Business Number (ABN) if you are operating a business in Australia. You should also determine if you are required to register for Goods and Services Tax (GST) if you expect your annual turnover to exceed $75,000 (or $150,000 for non-profit organizations).

Once you are registered for GST, you are required to lodge regular BAS with the ATO, usually on a quarterly basis. BAS is used to report your business’s GST-related transactions, including total sales, GST collected on sales, GST paid on purchases and other relevant information. Keeping complete and accurate records of all your business transactions, including sales, expenses, and other financial transactions, is crucial.

These records will help you complete your BAS accurately and avoid any issues with the ATO. Having organized records allows you to easily reference and verify your business transactions and financials when needed. It can help you track your income, expenses, and other financial activities, ensuring that you accurately report them on your BAS.

This can prevent errors, discrepancies, and potential penalties from the ATO. Accurate records can also help you identify tax deductions, credits, and other benefits that can minimize your tax liability and maximize your tax savings.

Accounting software or manual record-keeping methods assist to keep all relevant documents, such as invoices, receipts, bank statements, and other financial records, organized and easily accessible. Make sure you double-check your records for accuracy and consistency, and make sure to include all relevant information required for your BAS lodgement.

It’s also a good idea to backup your records regularly and store them securely, either in physical or electronic form. This can protect your records from loss, damage, or theft, and ensure you can access them when needed. Lodging and paying your Business Activity Statements (BAS) on time is critical to managing your business finances and complying with Australian tax laws.

BAS Deadlines

The Australian Taxation Office (ATO) sets specific deadlines for BAS lodgement and payment, and failure to meet these deadlines may result in penalties or interest charges. Therefore, it’s important to keep track of your BAS due dates and ensure you submit them on time to avoid unnecessary financial consequences. Late lodgement of BAS can result in penalties imposed by the ATO.

The penalties vary depending on the size of your business and the duration of the delay. For small businesses, the penalties can range from a few hundred dollars to thousands of dollars for each late BAS. These penalties can quickly add up, leading to significant financial burdens that can negatively impact your business cash flow and profitability. Additionally, repeated late lodgement may trigger higher penalties or even further compliance actions from the ATO, such as audits or investigations.

In addition to penalties, late BAS lodgement may also result in interest charges. If you have a tax liability that is not paid by the due date, the ATO may charge interest on the outstanding amount. The interest is calculated based on the daily compounding rate and can accumulate over time, resulting in additional financial costs for your business.

Staying organized and keeping track of your BAS due dates is crucial to avoid these potential penalties and interest charges. The ATO typically sets quarterly BAS due dates, which are generally one month after the end of each quarter. However, it’s important to note that due dates may vary depending on your business circumstances, such as if you have registered for the GST annual reporting option or if you have a different reporting frequency.

To ensure timely BAS lodgement and payment, consider implementing the following practices:

Set up reminders: Use calendars, task lists, or accounting software to set up reminders for your BAS due dates. This can help you stay on top of your lodgement obligations and avoid missing any deadlines.

Plan ahead: Allow ample time to gather and organize all the necessary information and supporting documents required for your BAS lodgement. This includes accurate records of your business transactions, income, expenses, and GST calculations.

Seek professional assistance: If you are unsure about your BAS lodgement requirements or calculations, seek guidance from a qualified accountant or tax agent. They can provide expert advice and ensure that you are meeting your BAS obligations accurately and on time.

Monitor your cash flow: Regularly review your cash flow to ensure that you have enough funds available to cover your BAS liability. This can help you avoid cash flow issues that may prevent you from meeting your BAS payment deadlines.

Keep a record of lodgement: Maintain a record of your lodged BAS and payment receipts as evidence of lodgement. This can serve as proof of compliance in case of any disputes or issues with the ATO.

By being proactive and diligent in meeting your BAS lodgement and payment deadlines, you can avoid unnecessary penalties, interest charges, and potential compliance issues with the ATO. Timely and accurate BAS lodgement demonstrates good financial management practices and helps you maintain a positive relationship with the ATO while ensuring that your business remains compliant with tax laws and regulations.

Before submitting your BAS, review it carefully to ensure that all the information is accurate and complete. Double-check your calculations, verify that you have claimed all eligible GST credits, and included all relevant sales and expenses. It’s important to note that the ATO requires businesses to keep records of their transactions and financials for at least five years.

Therefore, maintain organized and accurate records of your BAS statements and supporting documents for easy reference and potential audits. In conclusion, when dealing with BAS and the ATO, it’s crucial to be informed, comply with deadlines, keep accurate records, seek professional advice when needed, and utilize available online services. Remember, this is general advice, and your business circumstances may require additional consideration.

Consider partnering with a qualified accountant or tax agent to optimize your business and achieve financial success. With their expertise, you can unlock the full potential of your business and ensure compliance with tax laws and regulations.

For professional assistance, you can reach out to Bottrell Accounting. Our Newcastle and Maitland offices are conveniently located in two prime locations: Hunter St Newcastle and Lawes St East Maitland, providing easy access to our comprehensive services. Let us help you navigate the complexities of business taxation and financial management for a prosperous future.

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