The deadline for the latest quarterly Business Activity Statement (BAS) is fast approaching, and although the ATO does its best to make the process painless, there is still some work to be done before you can complete and lodge your BAS.
The first and most important step is deciding how you're going to process your BAS. Online accounting software makes it easier to organise the necessary information, but there are still actions you must take to make sure the information shown in the reports you generate are correct. There are many advantages to hiring a BAS registered agent to help with your statement (and you also benefit from an extra 4 weeks extension for lodgement and payment).
When you're lodging the BAS on your own, the process is not difficult, but, depending on how well you kept your records, it can be time consuming. There are several important steps, and keep in mind that proper completion is vital, as mistakes can lead to penalties.
Step One: Preparing your Information
First you need to reconcile your accounts to ensure that all your information is accurate and up-to-date. This means taking a close look at your financial records and making sure that your bank statements match your accounting information. You also need to make sure that purchases and cash expenses are recorded, information concerning creditors is correct, and all outstanding funds are justified.
For this step, you'll need to gather any accounts that have business transactions; receipts and invoices for those transactions; and receipts and invoices for any cash transactions. If you're using Xero, you should run the Bank Reconciliation Summary, and check your general ledger for exceptions.
Step Two: Enter Missing Transactions
Software like Xero greatly streamlines this process by connecting directly to your business bank account, so if you're doing this manually it may take some time. You'll need to record any missing transactions for which you have receipts and invoices. For each you will need a date, total amount of the transaction, GST, and a description.
Step Three: Total your Records
Once your information is correctly entered, you can either run an Activity Statement from your software or, if you are using the manual method, add up all the numbers to determine what amount of GST you owe or are owed for the tax period. This is the section where accuracy is absolutely vital, so check and double check that the information is correct!
You must also calculate your PAYG, which is the amount of tax that is withheld from employees' wage payments. You'll need to review your payroll and enter the amount of tax withheld and the gross wages for your employees. If you don't have any employees, enter zeros for this section.
Step Four: Update your Records and Lodge
Once you have completed the BAS, update your records with the new information and make copies of all the relevant documentation. Then either mail a hard copy of the BAS form to the ATO, file electronically through the ATO portal, or have your agent lodge for you. Make sure you pay what you owe on time or make arrangements with the ATO for payment!
Those are the basic steps to preparing and lodging a BAS with the ATO. While it's not difficult, and modern electronic methods like Xero have made it even easier, it's such an important part of your business that opting to bring in a professional is often a good idea. Good luck!