Lodging Business Activity Statements (BAS) is one of those key obligations to be aware of as an entrepreneur.
It’s something you wouldn’t have needed to know about as an employee, so it’s important to understand what it is and how it works once you take the leap into business ownership.
So, below you’ll find a mini guide we’ve put together, which is designed to help you navigate the process.
Step 1: Determine your eligibility, and lodgement timings
If your business earns over $75,000 per year, then BAS applies to you. Most businesses will submit quarterly as they earn less than $20 million per year, on 28 October (Q1), 28 February (Q2), 28 April (Q3) and 28 July (Q4)
These dates remain the same every year, so it’s a good idea to make a note of them, so you don’t lose track – if you fail to submit, or submit late without a legitimate reason, you could be in for a fine.
If your business earns over $20 million per year, then the ATO requires that you lodge monthly.
Step 2: Register for GST, and understand how to apply it
If you do earn over $75,000 per year, it’s important to register for GST. This can be done online, over the phone, or your registered tax or BAS agent can manage the process for you.
Just starting out and not sure if you will earn this much? Keep an eye on your monthly earnings, as once you reach the threshold you’ll have 21 days to register.
Once you’re registered, to ensure the 10% GST doesn’t eat into your fees or earnings, add it on top of your sale price. If you’re a product-based business this can automatically be applied to sales, and for service-based businesses, you’ll likely include it as a separate line item in your invoices.
Step 3: Know what to include in your BAS
Firstly, you’ll need to include details of the GST you collected on sales over the quarter, and how much tax was withheld from employees’ wages.
You’ll also want to input the amount of GST you paid on the expenses you incurred to run your business, as this data will be used to offset the GST on your sales, and means you could even be in for a refund.
Depending on your business, you’ll also be required to include details of fringe benefits tax, luxury car tax, wine equalisation tax, and fuel tax credits.
The key takeaway at this step? Accurate record keeping is a must, and this is where a qualified bookkeeper can take the stress of both monthly reconciliations and BAS time away!
Step 4: It’s time to lodge! But how?
There are quite a few ways to lodge your quarterly statements. These include online through the ATO, via your SBR-enabled accounting and bookkeeping software, by mail, or through MyGov if you’re a sole trader.
Our recommendation is to look to a registered tax or BAS agent such as MicroChilli to both prepare and lodge your BAS for you. This will ensure accuracy in your reporting to the ATO, and means you avoid fines for either including incorrect numbers, or missing lodgement deadlines.
Step 5: Stay on top of your record keeping
You’ve lodged, hurrah! However, the work doesn’t end there, small business owner. You’ll need to keep records of all data you supplied to the ATO for five years. They may audit you, so it’s important to have these well organised and easily accessible – saving them to the cloud is always a good idea.
We also recommend calculating the GST you made on sales, PAYG tax you withheld from staff, and GST you paid on business expenses at the end of each month. This will help you understand how the business is actually tracking, so you’re not shocked once BAS deadlines roll around.
Seeking some BAS time assistance?
With the Q2 deadline fast approaching, we’re here to help you prepare and lodge your BAS both in February, and throughout the year! Why not book a complimentary consultation, and let’s get on top of those obligations.