Running a business involves a lot of accounting and financial management, and one of the critical aspects of this is submitting your Business Activity Statement (BAS). In Australia, BAS is a form that businesses must lodge with the Australian Taxation Office (ATO) to report their tax obligations. Now, some of you may need more information on how this all works. Today, we will discuss what you need to know about BAS, its importance, and how to lodge it correctly.
What is a Business Activity Statement?
A Business Activity Statement (BAS) is a form that businesses in Australia must submit to the ATO to report their tax obligations, including goods and services tax (GST), pay as you go (PAYG) instalments, PAYG withholding, and other taxes. The BAS helps the ATO to determine the amount of tax you owe or the refund you’re entitled to. It is usually submitted either monthly or quarterly, depending on your business size and turnover.
What is Included in a Business Activity Statement?
The BAS form requires businesses to provide information about their financial activities for a specific period, including:
- Total sales
- GST collected on sales
- GST paid on purchases
- All other expenses
- Wages paid to employees
- PAYG tax withheld from employees’ wages
- Other tax obligations, such as luxury car tax, fuel tax credits, and wine equalisation tax.
Why is Submitting a Business Activity Statement Important?
Submitting your BAS on time is crucial as it helps you meet your tax obligations and avoid penalties. The ATO uses the information provided in the BAS to calculate your GST and other tax liabilities, and to determine whether you are eligible for refunds or credits. By submitting your BAS on time, you can avoid late payment penalties and interest charges. Failing to lodge your BAS on time may also result in the ATO taking legal action against your business, including court proceedings and debt recovery.
When is the Business Activity Statement Due?
The due date for submitting your BAS depends on your business size and turnover. If your business has an annual turnover of less than $75,000, you may be eligible to lodge your BAS annually. However, if your turnover is above $75,000, you must lodge your BAS either monthly or quarterly. The due date for lodgment and payment of your BAS is usually 28 days after the end of each reporting period.
How to Lodge Your Business Activity Statement?
There are several ways to lodge your BAS with the ATO, including:
1. Online Through the Business Portal: You can lodge your BAS online through the Business Portal, which is a secure online service provided by the ATO. To access the portal, you must have an Australian Business Number (ABN) and an AUSkey.
2. Using a Registered Tax Agent: You can hire a registered tax agent to prepare and lodge your BAS on your behalf. Tax agents are licensed professionals who can provide expert advice on tax matters and help you manage your tax obligations.
3. By Mail: You can also lodge your BAS by mail by completing and mailing the paper form to the ATO. However, this method may take longer, and there is a risk of the form being lost in transit.
What Are the Common Mistakes to Avoid When Lodging Your Business Activity Statement?
Lodging your BAS correctly is essential to avoid errors and penalties. Some of the common mistakes to avoid when lodging your BAS include:
Incorrect Reporting of GST: Make sure to report your GST correctly and include all taxable sales and purchases. Failure to report your GST correctly may result in penalties and interest charges.
Incorrect Calculation of PAYG Tax: Make sure to calculate your PAYG tax correctly and include all payments made to employees. Failure to do so may result in penalties and interest charges.
Late Submission: Make sure to lodge your BAS on time to avoid late payment penalties and interest charges. Mark the due date on your calendar and set reminders to ensure you don’t miss the deadline.
Not Keeping Accurate Records: Keep accurate records of all your financial transactions, including sales, purchases, and expenses. This will help you prepare your BAS accurately and avoid errors.
Conclusion
Hopefully, this article has helped clear things up about the BAS. By understanding what is required in a BAS, when it is due, and how to lodge it correctly, you can ensure that your business stays compliant with Australian tax laws and regulations.
Are you looking for a small business tax accountant in Perth? Prosperity Accountants is a team of accounting professionals who can provide services and expertise for you and your business. Contact us today!
