BAS preparation checklist for busy business owners

Preparing it accurately ensures compliance and avoids unnecessary penalties BAS preparation.

Businesses should keep detailed records of sales, expenses, wages, and other business costs. This includes maintaining proper logs like stocktake records to support GST claims BAS and GST tips. Using online tools and services can assist in streamlining the BAS process, ensuring that they lodge correctly and on time prepare and lodge BAS online.

Most BAS forms are personalised based on the specific business details and GST registration. Businesses often use accounting software to ensure accuracy, align records, and manage payments efficiently. Understanding and using the correct methods can lead to better financial management and savings in the long run.

Pre-preparation & organisation

Organising and preparing for BAS (Business Activity Statement) lodgement is crucial for Australian businesses. Key steps include confirming the reporting period, using the right accounting software, understanding ATO resources, and optimising workspace setup.

Confirm reporting period

Identifying the correct reporting period is essential to ensure accurate BAS preparation. This can be monthly, quarterly, or annually, depending on the business size and turnover. Businesses should check their GST registration to see which reporting period applies.

Your GST reporting and payment cycle depends on your turnover and can be:

• Quarterly: If your GST turnover is less than $20 million (unless the ATO requires monthly reporting). Due dates are staggered throughout the year (e.g., July-September quarter is due on October 28th).
• Monthly: Mandatory for businesses with a GST turnover of $20 million or more. Due on the 21st of the following month (e.g., July activity is due August 21st).
• Annually: Available for voluntarily registered businesses with a GST turnover under $75,000 ($150,000 for not-for-profits).

Understanding whether the business runs on a cash or accrual basis also impacts reporting. Make sure all financial data aligns with the confirmed period.

Accounting software

Using reliable accounting software simplifies BAS preparation. Automated features can handle repetitive tasks, easing the burden on business owners. Choosing a platform with automated income and tax tracking can prevent unexpected ATO issues.

For those struggling with manual accounting processes, adopting top accounting solutions such as Thriday that leverage AI can optimise financial management. These tools typically include real-time reports, which are invaluable during BAS preparation.

Workspace setup

A well-organised workspace is vital for accurate BAS preparation. This includes having a designated area for financial paperwork, ensuring easy access to documents when needed. Consistent filing and digital storage practices are crucial to keep records in order.

It's also beneficial to integrate accounting systems like Thriday with other office tools. Businesses can enhance efficiency by using systems that support automated accounting, reducing manual data entry and the potential for human errors.

Income reconciliation

Proper income reconciliation is crucial for preparing an accurate Business Activity Statement (BAS). This involves matching sales invoices, bank statements, and other income sources. Each plays a key role in ensuring that reported income figures are precise and that any errors are identified and corrected promptly.

Sales invoices

Sales invoices are essential for tracking revenue. Each invoice should list details such as the date, invoice number, customer details, description of goods/services, amount, and GST (if applicable). Checking these invoices helps verify that all sales income is correctly recorded. It's important to ensure that every issued invoice corresponds to a real and completed transaction.

Organising invoices by date or invoice number can simplify tracking. Regularly cross-checking them with the recorded revenues can reveal discrepancies. Here's what to watch out for:

• Missing invoices: Ensure every sale has a corresponding invoice.
• Duplicate invoices: Identify any instances where the same sale is recorded twice.
• Incorrect information: Verify the accuracy of details like dates, amounts, and customer information.

Businesses might find it useful to use accounting software that automates the process, making it easier to catch errors. AI-powered software can further enhance this by automatically extracting invoice data and identifying potential errors.

Bank statements

Bank statements show all financial transactions, providing a comprehensive view of income deposited into business accounts. Comparing bank deposits to recorded sales helps confirm that all income has been properly declared. Any unidentified deposits should be investigated to see if they represent missed sales or other income. This might include:

• Late payments: Payments received for invoices issued in a previous period.
• Pre-payments: Deposits for goods or services to be delivered in the future.
• Refunds: Reimbursements from suppliers or refunds to customers.
• Loans or investments: Funds received from loans or investments.

Reconciliation involves methodically reviewing all entries, ensuring no item is overlooked or misclassified. Many businesses benefit from synchronising their accounting systems with their bank feeds, allowing for real-time tracking and simplifying the reconciliation process.

See it for yourself how much time an AI-powered accounting app like Thriday save you. Take this quiz.

Other income sources

Other income sources might include interest, dividends, or royalties. Each source should be accounted for and verified to ensure accurate reporting. Having detailed records for these types of income helps in understanding their impact on the overall financial health.

Businesses should list these sources and verify that each amount aligns with the records. It's important not to neglect any income, no matter how small it may seem. Consistent review and documentation keep the business prepared for audits and help maintain healthy financial practices. Thriday can assist in automatically categorising these income sources and providing insights into their impact on the business.

Expense reconciliation

Expense reconciliation is a crucial part of BAS preparation. By accurately reconciling purchase invoices, bank/credit card statements, and expense categories, businesses can ensure accuracy and compliance. Special attention is required for items that have unique tax implications. 

Purchase invoices

Proper handling of purchase invoices is vital. Ensure that each invoice corresponds to a paid transaction, and keep records organised to simplify auditing. Accurate data entry prevents discrepancies between records and actual expenses.

Matching invoices to payments helps verify GST claims. Invoices should detail supplier information, tax amounts, and the date of the transaction. This makes it easier to track expenses accurately. Here's what to look for when reviewing invoices:

• Essential information: Supplier name and ABN, invoice date and number, description of goods/services, quantity and unit price, and GST amount (if applicable).
• Matching: Ensure each invoice is matched to a corresponding payment in your bank or credit card statement.
• Validity: Confirm that the expense is a legitimate business expense and not a personal expense.
• Accuracy: Verify invoice details (amounts, dates, descriptions) against your internal records (e.g., purchase orders, delivery dockets).

Use Thriday's mobile app to scan paper invoices and receipts, eliminating the need for physical storage and simplifying record-keeping. On top of that, you can also forward digital invoices and receipts to Thriday, which automatically saves and reconciles them with bank transactions.

The app also features smart GST recognition. It automatically recognises and extracts GST information from invoices, ensuring accurate BAS and tax calculations.

Bank/credit card statements

Bank and credit card statements help verify expenses already recorded in financial systems. Regular checks ensure consistency between system records and bank documents. Discrepancies should be investigated promptly.

It is important to reconcile each statement carefully. Any unfamiliar transactions should be identified and clarified with payment evidence. This helps prevent unintentional errors in financial reporting. Here are some potential discrepancies to watch out for:

• Unfamiliar transactions: Identify any transactions you don't recognise and investigate their purpose.
• Duplicate payments: Look for any instances where you may have been charged twice for the same expense.
• Missing payments: Ensure that all recorded expenses have corresponding entries in your bank/credit card statements.

Thriday automatically reconciles receipts and invoices to bank account transactions, eliminating the need for manual matching and saving you time (and money). 

Expense categories

Categorising expenses accurately supports precise financial analysis. Businesses should assign each expense to the appropriate category, such as supplies, utilities, or travel. This classification allows for better insight into where the business is spending its money.

Using consistent categories helps in generating meaningful reports. It also ensures that GST is claimed correctly for each type of expenditure as per regulations. Consider these points when categorising expenses:

• Accuracy: Ensure each expense is assigned to the most appropriate category.
• Consistency: Use the same categories across all your financial records.
• GST implications: Understand the GST treatment for each expense category.

Special attention items

Certain items require extra care during reconciliation. Transactions like employee expenses, international purchases, or assets may have different tax treatments. They necessitate careful review to ensure compliance.

For example, employee expenses may need receipts or logs to support claims. Additionally, international purchases may involve specific considerations for claiming GST. Proper handling prevents potential errors in expense reporting. Here are some key areas requiring special attention:

• Employee expenses: Ensure proper documentation (receipts, logs) and consider FBT implications.
• International purchases: Understand GST implications and currency conversion requirements.
• Assets: Correctly calculate and claim depreciation expenses.

By meticulously reconciling your expenses, leveraging accounting and tax technology like Thriday, and paying close attention to special items, you can ensure your BAS is accurate, compliant, and helps you minimise tax and maximise returns.

GST calculations & reconciliation

Calculating GST correctly is crucial for any business. This involves recording GST collected from sales and GST paid on purchases. Reconciliation ensures that these figures align with the business activity statement (BAS).

GST collected on sales

When a business sells goods or services, it collects GST on sales. This tax is typically 10% of the sale price. To ensure accurate calculation, maintaining detailed sales records is essential. These records should include information such as the invoice date, customer details, and the GST amount collected.

• Accurate calculation:
  • Ensure each sales invoice clearly shows the GST amount, which is generally 10% of the sale price.
  • Be mindful of whether prices are GST-inclusive or GST-exclusive to avoid calculation errors.
  • Identify any GST-free or input-taxed supplies, as these don't attract GST.
• Record keeping:
  • Maintain detailed sales records, including invoices, receipts, and customer details.
  • Use a sales journal or accounting software to record GST collected on sales.
  • Utilise the ATO's GST calculation worksheet and online tools for assistance.

GST paid on purchases

GST paid on purchases refers to the tax included in the price of goods and services bought by a business for its operations. Keeping track of purchase invoices is vital, as is ensuring that each one clearly outlines the GST paid. It's important to segregate GST-taxable from non-taxable purchases.

• Accurate tracking:
  • Ensure each purchase invoice clearly shows the GST amount paid.
  • Understand which purchases are eligible for GST credits (generally, those used for business activities).
  • Identify any GST-free or input-taxed purchases, as you cannot claim GST credits for these.
• Record keeping:
  • Use a purchase journal or accounting software to record GST paid on purchases.
  • Keep accurate records of your suppliers, including their ABNs.

PAYG withholding & other tax obligations

Business activity statements involve several tax obligations, including PAYG withholding, PAYG instalments, and other taxes like FBT. Each plays a crucial role in meeting tax compliance and requires careful attention to detail. Understanding these components helps safeguard against penalties and ensures smooth business operations.

PAYG withholding

PAYG withholding involves deducting amounts from payments made to employees. It's crucial for employers to withhold the correct amount from wages and report it accurately to the Australian Taxation Office (ATO). Employers must file activity statements detailing these amounts in order to meet compliance standards. 

Failure to comply may lead to penalties. For effective payroll management, one can explore resources like a guide to payroll for small businesses. Correctly filing your PAYG withholding ensures that employees' taxes are credited correctly and efficiently.

PAYG instalments

PAYG instalments are prepayments of estimated tax obligations on business and investment income throughout the year. This system helps spread out tax payments and avoid a large tax bill at the end of the financial year. Businesses receive an instalment notice or report through their activity statement for these required payments. 

Each instalment amount is based on the business's projected income. It's important to update income projections with the ATO if significant changes occur, ensuring instalment amounts remain accurate. Timely instalments assist in maintaining steady cash flow and reduce financial stress during annual tax periods.

Other taxes

Beyond PAYG, businesses may need to report other taxes such as Goods and Services Tax (GST), fringe benefits tax (FBT), or luxury car tax. The activity statement encompasses all these diverse tax obligations, requiring careful tracking and reporting. Each tax type might have its own specific reporting requirements and deadlines.

Businesses need to maintain accurate records and stay informed about any changes in tax regulations. Addressing these obligations correctly on the business activity statement aids in avoiding fines and creates a transparent financial environment, facilitating long-term business success.

BAS lodgement & record keeping

Preparing and lodging a Business Activity Statement (BAS) effectively requires careful attention. Ensuring all records are accurate and choosing the right lodgement method will help keep your business compliant.

Final review

Before lodging, it’s crucial to double-check all entries. Errors in GST calculations or sales figures can lead to inaccurate lodgements. Cross-verify your figures against the business records, including sales invoices and receipts.

Check the GST credits and debits to ensure accuracy in your statements. If a mistake is found, address it using correction processes before submission. This thorough check helps to avoid potential penalties and interest charges from the Australian Taxation Office (ATO) for incorrect lodgements.

Lodgement methods

Several methods are available for lodging a BAS. Online lodgement is the most efficient, letting you use the ATO's Business Portal or accounting software that integrates with the ATO system. This process streamlines submissions and reduces errors. Book a call with Thriday to know how to lodge BAS online. 

Paper forms are another option, although less convenient. Some businesses may choose to work with a registered BAS agent or bookkeeper who can guide the lodgement process. Selecting the right lodgement method can enhance efficiency and ensure timely submission.

Lodgement due date

Understanding your BAS lodgement due date is key to avoiding late fees. Typically, businesses must lodge quarterly, but those with high turnover may have monthly obligations. The ATO provides a specific due date for each lodging period, usually within 28 days after the end of each quarter.

It's important for businesses to mark these dates on their calendar and plan in advance to gather necessary documentation. Late penalties can be costly, so always aim to lodge on or before the due date.

Record-keeping

Good record keeping is fundamental for accurate BAS reporting. Businesses must keep detailed records of income, sales, and expenses. Proper documentation supports the claims made in your BAS, such as GST credits and fuel tax credits.

Consider using digital tools to organise and store records, making it easier to retrieve information when needed. A BAS agent or bookkeeper can also help maintain these records, ensuring they meet ATO requirements. Good record keeping not only helps with current BAS statements but improves the overall financial management of the business.

Key considerations

When preparing a Business Activity Statement (BAS), there are several important factors to keep in mind. One key consideration is ensuring accuracy. Double-check all figures for any discrepancies and make sure that all values align with the documentation you have. Mistakes in BAS submissions can lead to issues later on.

It's also important to keep track of timing. Businesses must lodge their BAS by the due date to avoid penalties. Mark the deadlines on your calendar and set reminders to ensure timely submissions. Organising this in advance can help in avoiding any last-minute stress.

Utilising accounting software such as Thriday can greatly simplify the process. These tools can automate several tasks, including calculating GST and generating necessary reports. It's important to choose software that suits your business needs, as different software offers varying features and complexities. Make sure the software you use is updated with the latest tax rules.

For businesses eligible for fuel tax credits or those with PAYG withholding obligations, accurate reporting is crucial. Ensure that all applicable credits and withholdings are correctly reported in your BAS.

Organisation is key. Keep all relevant documents, such as invoices and receipts, in an organised manner. This makes it easier to compile accurate information and reduces the chance of missing key details.

Regularly review and reconcile your financial records. This helps in identifying any discrepancies early and ensures that your BAS is as accurate as possible. Keeping your records up-to-date also helps in handling any audits or inquiries more efficiently.

Planning and attention to detail can make BAS preparation less daunting, ensuring compliance and accuracy.

Frequently asked questions

Efficient BAS preparation requires organised records, and both professional and self-management options exist depending on one's needs. Excel can be a useful tool, while templates offer structured guidance. Understanding the BAS preparation steps and methods for correcting past errors is crucial.

What is the best way to organise records for efficient BAS lodgement?

Organising records is key to efficient BAS lodgement. Keeping digital and physical copies in a systematic manner helps. Categorising invoices, receipts, and bank statements by date or type makes retrieval easy.

Can one self-manage BAS submissions, or is a professional accountant required?

It is possible to manage BAS submissions independently with the right knowledge and resources. For those unfamiliar with tax processes, a professional accountant can provide expertise, ensuring compliance and accuracy.

What are the steps involved in preparing a BAS for a business with GST obligations?

Preparation involves gathering all relevant income and expense records, calculating the GST collected and paid, and reporting these in the BAS form. It's essential to review these details before submission for accuracy.

How does one rectify errors made in previous BAS submissions?

Errors in previous BAS submissions can be corrected by lodging an amendment. This can typically be done using online tax accounting systems. It's important to address these issues promptly to avoid penalties.

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