Whether you’re a seasoned business owner or growing your business, understanding your obligations when it comes to Business Activity Statement (BAS) is critical. GST codes and tracking your BAS obligations can seem overwhelming at first, but it doesn’t have to be as painful a process as many business owners find it to be.

In this article, we’ll explore how BAS works, when you need to start collecting and paying it, and considerations to help you budget for BAS payments.

How BAS Works

A BAS is a form submitted to the Australian Taxation Office (ATO) by businesses to report their tax obligations. It includes details on Goods and Services Tax (GST), Pay-As-You-Go (PAYG) instalments, PAYG withholding tax, and other tax obligations. Essentially, BAS helps you report and pay the taxes you owe based on your business transactions.

To complete a BAS, you will need to provide:

  • Details of your sales and purchases
  • GST collected and paid
  • PAYG withholding amounts
  • Any other taxes applicable to your business

When to Start Collecting and Paying BAS

If your business has a turnover of $75,000 or more, you must register for GST and start lodging BAS. Freelancers and smaller businesses need to be aware of this threshold, as once you cross this threshold it’s time to register and comply with BAS regulations.

When you do start lodging your BAS, doing it at the right time can save you a lot of headaches later down the track. Late submissions can lead to penalties and interest charges, so it is important to be organised and stick to deadlines.

Reporting Obligations and Deadlines

Once registered, you need to report your BAS either monthly, quarterly, or annually, depending on your business size and turnover. Understanding these obligations and keeping track of deadlines will help you stay compliant.

If you have a registered accountant (like us) or a registered BAS agent to submit your BAS on your behalf, the ATO allows additional time to lodge your statements.

Tips for Budgeting to Make Your Payments Manageable

It is important to be aware that paying GST can affect your cash flow, pricing strategies, and financial planning. Ensuring you have systems in place to accurately track GST, collected and paid, will help you manage these impacts effectively. If you don’t have a system in place yet, reach out for a chat and we can help you set up a system to make it easier for you to accurately track and code your transactions.
Accurate financial records are the backbone of effective budgeting and correct reporting to the ATO! Using accounting software can automate much of this process, ensuring that your records are always up-to-date and reliable.

Strategies to Manage Cash Flow

Many small businesses lodge their BAS quarterly, and the combination of super, PAYG and GST can compound and be a surprise if you are not prepared. Three easy things to do to make sure you are prepared is budget, forecast and monitor:

  • Set Aside Funds Regularly: Allocate a percentage of your income to cover GST and other tax obligations.
  • Forecasting: Use financial forecasting to anticipate your tax liabilities and plan your finances accordingly.
  • Monitor Expenses: Regularly review your expenses to identify cost-saving opportunities.

ATO Instalment Plans Explained

For businesses struggling to meet their BAS obligations, the ATO offers instalment plans. These plans allow you to spread your payments over a longer period, making them more manageable. However, it should be noted that it is at the discretion of the ATO to approve a payment plan, and you shouldn’t assume you will be eligible. ATO payment plans are a safety net or last resort for businesses struggling to meet their obligations.

Making Sure BAS is in Your Budget

We recommend incorporating BAS into your overall budgeting process. This means regularly reviewing your financial plan to ensure that funds are allocated for your tax obligations. Periodically review and adjust how much you are setting aside to reflect changes in your business operations or financial circumstances.

Budgeting for BAS doesn’t have to be a daunting task. If you need assistance, we are here to help. Feel free to book a chat with Amanda and keep your business on track.

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