A Short Guide to Understanding BAS
If you have just started your business, you probably might experience some problems with understanding the Australian tax code. However, as a business owner, you need to at least know the basics, such as GST and BAS.
There’s no need to panic because we have got all the information right here for you. So, let’s start with the world of finances:
What Is BAS?
BAS, also known as Business Activity Statement, is a form that helps businesses pay GST, PAYG (Pay As You Go) withholding tax, PAYG installments, and other taxes. You might have registered for GST and ABN for your business. So, you needn’t worry because you will automatically get a BAS.
As for GST, it stands for Goods and Services Tax, which is a value-added tax applied to goods and services sold for consumption. We all know that taxes are due on a specific date. Similarly, BAS also needs to be paid within a specific time frame, which differs from business to business based on how much they make.
To answer the question, “When is BAS due?” ― it’s done monthly, quarterly, and annually.
Monthly Reporting: On 21st, at the end of the tax period month.
Quarterly Reporting
- October 28th: July, August, and September
- February 28th: October, November, and December
- April 28th: January, February, and March
- July 28th: April, May, and June
Annual Reporting: 31st October
How BAS Works
When BAS is due, you need to go over the readily available numbers. Hence, you need to keep a record of all your expenses, wages, fees, sales, and other costs involved with the business. A few other records that might be required include stock-take and books.
To make this easy on themselves, many businesses use bookkeeping services to keep things running. Outsourcing bookkeeping is worth the expense as it helps you delegate the one task where even a single, small mistake can be disastrous. The moment an entrepreneur takes the first step in starting their business, they should consider hiring a professional for this task.
BAS will require you to note down the sales made in a specific period, the GST paid on expenses, the GST collected, staff wages, and tax withheld from wages. If you are using the PAYG installment system, the last will be completed for you.
Keep in mind that you will only be able to claim a portion of your business with GST on purchases. Moreover, you won’t be able to claim GST for private expenses, such as food and entertainment. If you buy something used for both personal and business purposes, you are only entitled to the business portion GST.
BAS Benefits
Now that you know, “when is BAS due?” and what you need to submit it to the business portal, let’s look at what benefits you get by lodging your BAS early:
You Can Opt for a Payment Arrangement
Businesses go into debt from time to time. Hence, ATO offers small businesses that experience financial difficulties the option to choose a payment plan under certain circumstances.
Good Lodgement History
By being on time, your lodgement history that’s being tracked by ATO will be better. Good lodgement history will allow you to develop a good relationship with ATO and even ask for deferral if you find yourself in a sticky situation.
No Late Penalties
If BAS is lodged after the submission date has ended, you will be charged a penalty from the Australian Tax Authority (ATO). The amount depends on your poor lodgement history.
You Can Measure Your Business’s Progress
By lodging BAS quarterly, you receive a snapshot of the financial position of your business. This snapshot will help you see how your business is doing after every quarter.
That’s how BAS works in your favor! Just keep the dates marked on your calendar and ensure that every piece of paper that mentions an expense is recorded. This way, you will have everything in order when the time comes to lodge BAS.
