A Lesson in Liability – Understanding BAS Statements

When it comes to managing your business accounts, you want to be sure you get it right. You can choose the right people for the job and utilise the best software packages on the market but it’s important to gain some kind of understanding of what’s required of you. You don’t need to become a qualified accountant, however, taking some time to understand your obligations to the Australian Taxation Office (ATO) will make your life easier when it comes to meeting your responsibilities as a business owner.

In Australia, businesses are required by the ATO to submit a business activity statement, or BAS statement, either on a quarterly or on a monthly basis. If a business fails to meet this obligation, they will incur penalties. To ensure you avoid these penalties, it’s in your best interests to keep meticulous financial records as otherwise, the process can become very time-consuming. It’s also important that you complete the BAS statement in full and avoid making any mistakes as these too could cost you in penalty fees.

Continue reading to learn more about BAS statements and the steps you need to take to ensure you meet your obligations.

What Exactly is a BAS Statement?

A Business Activity Statement is a form, which is used in order to report all business and investment income to the Australian Taxation Office to ensure that all of the related tax obligations are fulfilled. The information you provide must include Pay As You Go (PAYG) instalments and PAYG withheld, Goods and Services Tax (GST) and also Fringe Benefits Tax (FBT). Wine Equalisation Tax (WET), Fuel Tax Credits, Luxury Car tax (LCT) and deferred superannuation instalments are also included in a BAS submission.

When to Lodge Your BAS Statement?

BAS Statements are lodged on an agreed reporting schedule, which is either monthly or quarterly. For businesses who are registered for any of the taxes we have mentioned, the report must be submitted a BAS for each of the agreed periods.

If you are due to submit your BAS on a monthly basis, this will usually be on the 21st of each month, while those reporting on a quarterly basis will submit their report on the 28th of October, February, April and July respectively. If you do not lodge your BAS by the agreed date, you will be subject to a Failure to Lodge (FTL) penalty, which will be $170 and will be charged every 28 days for a maximum of five 28 day period. However, if your business is classed as a medium or a large business (dependent on turnover) the fine can be up to five times that amount.

Completing The Form Correctly

Preparation Is Everything
As any business owner in Australia will tell you when it comes time to lodge your BAS statement to the ATO, the more prepared you are, the better. If you have been keeping your financial records in order, everything will be much easier to manage and the entire process will be smoother. You will need access to all of your business accounts, invoices and receipts that were issued for any cash transactions.

Areas To Pay Attention To
Take some time to reconcile your bank accounts, to be sure that all of your information is current and up-to-date. Go through both your purchases and cash expenses, double-check your creditor information and address any outstanding funds. Also, ensure that you record any missing transactions that you have invoices or receipts for. You will need to include a description of the transaction, the date and the total amount, as well as GST.

Lodge Your BAS Successfully
With BAS submission dates looming, many business owners start to get worried and stressed. Be sure to keep your finances in order, track all of your purchases and spending and keep your invoices and receipts on file. By taking some time to understand exactly what your obligations are and how to fill out the forms correctly, you’ll be able to focus on the important aspects of your business without worrying about that dreaded due date. Successfully completing your BAS statement is all about being prepared, staying diligent, and taking the right steps to ensure you don’t end up incurring penalties.