Managing your own business activity statements (BAS) is a vital step towards properly understanding your business's financials.
So it’s important you know how to lodge your BAS correctly and how to avoid penalties.
What’s a BAS?
If your business is registered for GST (goods and services tax), you’ll need to lodge a BAS.
Essentially, your BAS is reporting to the ATO your total sales for a given period and how much GST you collected on sales. You’re also required to report how much GST you paid on purchases.
From that information, the ATO will work out your GST bill or refund.
Your BAS also covers other applicable tax obligations, such as:
- Pay as you go (PAYG) income tax installment.
- Pay as you go (PAYG) tax withheld.
- Fringe benefits tax (FBT) installment.
- Luxury car tax (LCT).
- Wine equalisation tax (WET).
- Fuel tax credits.
Every business’s BAS will look different, depending on which tax obligations are covered, but all statements will ask you to tally up the amount for each tax obligation.
If your overall obligation is positive, you need to pay the amount owing to the ATO.
If it’s negative – for example, due to the GST on your purchases offsetting your tax obligation – you’ll receive a refund from the ATO, or the amount can contribute to offsetting any tax debts.
Which businesses need to submit a BAS?
Businesses that are registered for GST, which is mandatory for companies with an annual GST turnover of $75,000 or more (or $150,000 for a non-profit body), must submit a BAS.
You can register for GST if your turnover is below the threshold, but it’s optional.
You also need to register for GST if you provide taxi or limousine travel for passengers (including ride-sourcing) regardless of your GST turnover, or if you want to claim fuel tax credits for your business.
How to lodge BAS online
Most businesses that lodge a BAS do so online or through a registered tax or BAS agent, but you can also lodge by mail.
If your preference is to lodge online, you have a couple of different options:
- Online services using myGov: for individuals and sole traders – accessed via myGov (suitable if you’re a sole trader and don’t need any other Standard Business Reporting (SBR) software, such as Xero or Reckon).
- Business Portal: a secure ATO website used to manage your business tax affairs (separate from other business software). This is commonly used by businesses that aren’t individuals and sole traders.
- SBR-enabled software: allows secure online lodgment directly from financial, accounting or payroll software, which is often integrated with business software that’s tailored to specific industries. Common products include Xero and Reckon, but a full list can be found here.
When to submit your BAS
Most small businesses are required to report and pay quarterly, with the deadlines as follows:
- Q1 (July, August, September): 28 October.
- Q2 (October, November, December): 28 February.
- Q3 (January, February, March): 28 April.
- Q4 (April, May, June): 28 July.
The ATO says that if you lodge online, you may be eligible for an extra two weeks to lodge and pay your quarterly BAS (except for Q2 as it already includes a one month extension).
You’re required to report your GST monthly if your business has an annual turnover exceeding $20 million, or if you’ve elected to do so. The deadline is usually the 21st day of the next month.
You are also required to report your PAYG withholding quarterly if it is less than $25,000 a year, and more frequently if it exceeds this.
Amounts owing to the ATO can be paid via credit card, BPAY, online, via mail or in person at an Australia Post store.
BAS penalties and mistakes
It’s important not to be tardy. If you’re late in lodging your BAS, fines start at $210 for each 28-day period overdue.
If you’ve made an error while reporting your BAS, the ATO says that many mistakes relating to GST and fuel tax credit can be corrected in your next BAS.
However, if you make a mistake that you’re unable to correct, you’ll need to lodge a revision.
How managing your BAS can improve your business
Managing your BAS is a non-negotiable part of running a business and many businesses choose to pay a bookkeeper, which lessens or removes the liability of the business owner for penalties and fines.
Bookkeepers typically charge under $200 for BAS lodgement, depending on the size of your business.
But Tom Martin, Director of Water Tight Canberra, says upskilling yourself to manage your BAS and other accounting responsibilities can help take your business to the next level.
His plumbing business recently won the 2019 ACT Telstra Business Awards in the category of Small and Succeeding, and Martin puts a lot of it down to the accounting courses he took at Canberra Institute of Technology.
Not only did lodging his BAS himself help save costs in the early days, but now that his business can afford a bookkeeper, Martin can quickly double-check his business’s financials to ensure everything is on track.
“Many small business owners don’t understand their finances well enough. But it helps us with everything we do,” he says.
“I’m able to look at our financial statements during our monthly board meetings, understand them and find anomalies that could be a potential concern.”
Getting organised and using the right tools can make it an opportunity to better understand your business, rather than a troublesome burden.
“Business owners really shouldn’t be daunted by looking into lodging their own BAS. And if they are, they can always do a quick online computer accounting course,” Martin says.
“Getting to know and understand these business fundamentals can really help build a platform for you to expand your financial acumen.
If your regular BAS payments are affecting your cash flow, a line of credit could help smooth it out. Talk to a Prospa business lending specialist on 1300 882 867 to learn more.
