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Five BAS Errors And Ways To Avoid Them

If you are a business owner, you are surely familiar with the process of preparing and lodging Business Activity Statements (BAS). When you prepare activity statements, do you think of it as a mere obligation you need to fulfill? If you do not have keen eyes on preparing these statements, you will have the tendency to open your doors to mistakes. Here are the common errors you need to avoid when preparing your activity statements.

1. Do not change your PAYG Income Tax Instalment unless you are advised by your bookkeeper or accountant

You might be having a notion that the ATO calculates your income tax amount in real-time, but they are working about one to two years behind. The path your business takes can also affect your income tax amount. If your business shrinks or grows, the first step you may take is to change or vary your income tax instalment amount. Before you vary your income tax amount, make sure you check with your accountant or bookkeeper. You can pay for fines and penalties for doing this.

2. Remember to lodge by the deadline

As a business owner, you need to take note of the important lodgement dates. For BAS, you need to lodge on the 28th day of the month and 28 February for the December quarter. You will get an extra month to lodge if you choose to lodge via a registered BAS agent. Be careful with late lodgement because the ATO will fine you $180 for each month that the BAS is lodged late. You can be fined for a maximum of five months.

3. Not reconciling your GST and PAYG back to the balance sheet

There are instances when you need to make changes to a transaction or tax rate but when a BAS has already been lodged, the changes will not reflect on the reports. You can only identify alterations if you compare quarterly reports to the balance sheet accounts. You need to engage the services of your accountant or bookkeeper to reconcile PAYG and GST.

4. Failing to identify whether your accounts should be on the cash or accrual basis

Once you register for GST with the ATO, you need to know whether you will be using the cash or accrual accounting method. In theory, a turnover of less than $2 million should select the cash method, but this may not always be the best option. For small businesses, the accrual method is the right choice to consider because it can assist with cash flow.

Tamara Deterding

Written by : Tamara Deterding

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