How to easily prepare a business activity statement (BAS)

A business activity statement (BAS) is used by GST-registered businesses to declare how much GST they’ve collected and paid.

The BAS is a form that you’ll fill out for your business (either paper or electronic). The ATO then uses that information to work out your GST bill or refund. The BAS can also be used for business income tax (if you ‘Pay-As-You-Go’), fringe benefit tax, employee income tax, etc.

To fill in your BAS you’ll need an accurate record of how much GST you have collected on your sales, and how much GST you paid on purchases.

The steps below assume you know where to find your reports in your bookkeeping program and some knowledge of using your bookkeeping program.  If you read through the steps and are still confused book a free call here for some assistance.

Steps to prepare your BAS

Step 1:

Make sure all your transactions are up to date for the period of your BAS (usually monthly or quarterly) and included in your bookkeeping software.

Step 2:

Reconcile your bank statements to your bookkeeping software.

Pro tip: ‘reconcile’ simply means checking that the transactions in your bank statements match the transactions in your software. It’s a handy way to check that you’ve included all your transactions.  The balance of the bank account in your software should match the balance on the bank statement adjusted for undeposited cash/cheques and unpresented payments/cheques.

Step 3:

If you do accounts receivable or accounts payable for your business, then review the relevant bookkeeping reports to see if they are all accurate, e.g. do you have any bad debts that need writing off?

Step 4:

Run an account transactions report in your bookkeeping software for the relevant period (i.e. month or quarter). Be sure to include the GST column in your report.

See the images below for where to find this report in Xero, and what it looks like.

Step 5:

Review the transactions in your bookkeeping software and look for any unusual items, e.g. if your bank charges were showing GST that would need to be fixed as GST isn't added to bank charges.

Pro tip: If you’ve been finding this step too time consuming at the end of each quarter, then break it into smaller chucks and do it at the end of each month. That way there is less to do at the end of the quarter.

Pro tip: Even if you have a bookkeeper, it's still worth you reviewing the transactions after your bookkeeper has gone through them as you know your business best.

Step 6:

Create a business activity statement in your bookkeeping software. Compare that statement to your last return or to your return for the same period last year. This allows you to do one last check for any unusual or missing transactions.

Step 7:

Finalise your BAS in your bookkeeping software, then lodge it within the 6-week deadline.

DON'T FORGET THIS STEP!

 It’s all too easy to have done the work, then get distracted and forget to hit submit or lodge it through the ATO portal.

Step 8:

Pay within the 6-week deadline.  You do not need to pay the day you lodge your BAS which can be lodged anytime during the 6 weeks.  I recommend setting up a payment through your bank account to be paid on the due date that way you can earn interest on the funds until the day it is due.

Beware – there are penalties for not filing or paying on time.

If you don’t file your return on time, then the ATO can fine your business up to $1,500.

If you don’t pay on time, then the ATO can start charging interest on the overdue amount.

Don't leave doing your BAS until the last minute. If you find an issue with a transaction, the software is down, or your bookkeeper is on holiday - you won’t have given yourself any time to spare.

We can often think of preparing our BAS as ‘hard’ (maybe dull??). Yet, as you can see from these steps it isn’t hard if you take a slow and steady approach, reviewing your numbers as you go and giving yourself plenty of time to make sure your numbers are accurate.

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