You work hard day in and day out to keep your business running like a well-oiled machine. However, even the most organised business owners can make mistakes when filing their quarterly business activity statement. Don’t let a simple oversight lead to big trouble with the tax office.
Whether this is your first time filing a BAS or you’re a seasoned pro, it never hurts to double-check that you’ve crossed your i’s and crossed your t’s.
In this article, we’ll walk through the five most common mistakes business owners make when filing their BAS and how to avoid them.
With a few simple checks before you hit submit, you can ensure your BAS is accurate and avoid unnecessary headaches. Read on to learn what errors trip up even the savviest entrepreneurs and how to file your BAS correctly every time.
What is the Business Activity Statement?
The Business Activity Statement (BAS) is a form Australian businesses use to report and pay various taxes to the Australian Taxation Office (ATO).
It typically includes information about Goods and Services Tax (GST), Pay As You Go (PAYG) withholding tax, PAYG instalment, fringe benefits tax (FBT), wine equalisation tax (WET), luxury car tax (LCT), and other taxes.
Businesses must lodge a BAS either monthly, quarterly, or annually, depending on their turnover and reporting obligations.
The BAS helps the ATO calculate a business’s tax owed and ensure compliance with tax laws. It’s an essential part of managing tax obligations for companies operating in Australia.
5 Mistakes to Avoid in Reporting Your Business Activity Statement
1) Incorrect Business Documentation
If your business records are a mess, your BAS will be too. To avoid errors, you must keep meticulous records of all your income and expenses. This means tracking each transaction, saving receipts, and reconciling accounts regularly.
Keep Receipts
Don’t just toss receipts in a box and hope for the best. File them by date or category so you can find them when needed. Scan paper receipts in case the ink fades.
Digital receipts are ideal since you’ll have a permanent record. If a receipt is lost or illegible, try to get a duplicate from the vendor. Every receipt is essential for an accurate BAS.
Reconcile Accounts Monthly
Don’t wait until the end of the year to reconcile your accounts. Do it each month to catch any discrepancies early. Compare statements from vendors and payment processors to your internal records.
Look for unauthorised charges or payments you should have recorded. Fix any issues promptly so your financial records are always up to date.
Record Every Transaction
Record every transaction in your accounting system in real time, whether it’s income, expenses, accounts payable, or accounts receivable.
Refrain from relying on memory or shoeboxes full of papers. The longer you wait to log transactions, the more likely errors will creep in.
Staying on top of your record keeping and accounts throughout the year is the key to filing an accurate BAS.
While diligence is required, it’s worth the effort to avoid potential penalties from the tax office for incorrect information. Keep your receipts, reconcile regularly, and record everything—your BAS will thank you!
2) Omitting Taxable Transactions from Records
One of the business’s significant mistakes is forgetting to report all taxable purchases and sales on their BAS. It may seem obvious, but it’s easy to overlook things in the hustle and bustle of running a company.
Record all goods and services purchased to produce income, including office supplies, raw materials, and equipment.
Remember things like rent, utility bills, and payments to subcontractors. The tax office considers these business expenses, so excluding them could result in paying more tax than required.
The same goes for all taxable sales of goods and services. Whether it’s your primary offering or a side product, report everything.
Some businesses need secondary sales or deals made on credit, only accounting for cash transactions. But the tax office wants to know about all your sales, regardless of payment method.
Keeping meticulous records is critical. Develop a routine for logging all business income and expenses as they occur. Review bank and credit card statements to identify any missing transactions.
Double-check that all revenue sources and spending areas have been adequately documented to avoid issues with your BAS.
While reporting everything may seem tedious, it will serve you well in the long run. Paying the correct amount of tax and maintaining accurate financial records gives you a solid foundation for business growth.
Recording all taxable purchases and sales as a habit, and you’ll breeze through BAS time confidently, knowing everything is in order.
3) Overlooking Available GST Credits
One of the most significant mistakes businesses make is not claiming all the GST credits they’re entitled to. The GST system allows businesses to claim back the GST paid on business expenses.
So, if you paid GST on supplies, equipment, utilities or anything else to run your business, you can claim a credit for the tax paid.
Missing some of these credits is easy if you’re not diligent. Go through all your expense receipts and invoices to identify anything that included GST.
Things like office supplies, rent, utilities and inventory should all qualify. Business travel expenses like flights, hotels, and meals are often eligible for GST credits.
Don’t leave money on the table that you’re owed. An extra few hundred or even a thousand dollars in GST credits can make a big difference for small businesses.
If you hire an accountant Greensborough, have them double-check your books to ensure all eligible GST has been claimed. They have the experience to spot anything you may have missed.
If you file your own BAS, take the time to review expenses from the entire reporting period. Highlight or make notes on anything that included GST, then total up all those amounts.
You should claim that credit in your BAS. The ATO website also has helpful information on the types of business expenses that qualify for GST credits.
Claiming all the GST credits you’re entitled to is an easy way to minimise the tax you pay and improve your business’s cash flow.
So, do a comprehensive review of expenses, get advice from your accountant if needed, and ensure you get all the tax benefits for your business.
4) Delays or Non-submission of BAS
Not filing your Business Activity Statement (BAS) is a big mistake that can cost you. The BAS is how the Australian Tax Office (ATO) keeps tabs on the quarterly tax you owe.
Failing to submit it means you’ll face penalties for late payment and interest charges on the amount due.
File on Time, Every Time
Make filing your BAS a priority each quarter. The due dates are fixed—the 28th day after the end of each quarter—so there’s no excuse for being late.
Set a reminder two weeks before it’s due to gather your sales records, income, deductions, and payments. If you need an extension, apply to the ATO ahead of time. They may grant you extra time, but interest will still accrue.
Pay What You Owe
Submitting an empty BAS or paying less than the amount owed is a bad idea. The ATO receives information about your business income and expenses from third parties.
They’ll know you are underpaid if your report doesn’t match up. They can audit your financial records and charge penalties and interest on the balance owed. It’s best to report accurately and pay the total amount on time.
Get Help If You Need It
Running a small business is tough, and the paperwork can feel overwhelming. Don’t be afraid to ask for help from an accountant.
They can ensure your BAS and other tax obligations are filed correctly and on schedule.
The small upfront investment in accounting fees may save you thousands in the long run. Your accountant Greensborough can also help uncover deductions and credits you may be missing to lower your tax burden.
Keeping on top of your BAS obligations is critical to avoiding trouble with the tax office. Make it a priority each quarter to report accurately and pay on time.
Consider hiring an accountant to guide you through the requirements and help keep your business tax-compliant.
Following these tips will help you avoid errors and ensure a hassle-free relationship with the ATO.
5) Neglecting Necessary Professional Advice
Making mistakes when filing your quarterly BAS could easily cost you money or time. One of the most significant errors of business owners is not seeking professional accounting advice when needed.
Unless you have an accounting degree and keep up with the frequent changes in tax law, there are probably complex situations that will confuse you. Don’t rely on assumptions.
Consult an accountant rather than guessing how to report something or taking advice from well-meaning friends.
They can review your situation and determine how to report income, claim deductions, and account for one-off events. A small upfront fee for an hour of their time could save you from penalties, audits, or leaving money on the table.
Many small businesses have tax incentives, deductions, and credits available that could reduce their quarterly tax liability. However, many business owners miss these benefits simply because they need to learn how to ask about them.
When meeting with your accountant Greensborough, inquire about any tax savings opportunities that could apply to your business. They may be able to identify deductions or credits you qualify for that you weren’t even aware of.
One of the biggest mistakes you can make when filing your BAS is not taking advantage of the expertise and advice offered by accounting professionals.
Their guidance can help ensure you file an accurate report, pay only what you owe, and potentially even identify ways for your business to pay less taxes—a win-win situation.
Summation
So, these five common mistakes can derail your BAS filing.
You can avoid errors and hassles by knowing these pitfalls, double-checking your work, and seeking help. Staying on top of your BAS ensures your business remains compliant.
And compliance means less stress for you, more time for the important stuff, and smooth sailing with the tax office.
Keep your receipts organised, read up on recent changes, pay attention to deadlines, and don’t hesitate to have an expert look things over. Remember, when it comes to BAS filing, staying vigilant is key.
With Roger Boghani, your trusted advisor in financial matters, you’re not just avoiding errors – you’re ensuring smooth sailing for your business through expert guidance and support.
