Whether you have been running your business for a long period of time or a new to the business world, Business Activity Statements can cause many headaches for small business owners. Laws and regulations that are constantly changing and being updated by the Australian Taxation Office (ATO), in addition to the already complex nature of GST can result in small business wasting a lot time trying to produce and lodge these reports.
In order to assist the small businesses of Geelong, the Bellarine & The Surfcoast the team at Progressive Accounting Solutions have provided the answers to some frequently asked questions small businesses may have when it comes to producing BAS reports:
Q: How often are Business Activity Statements (BAS’s) required to be lodged?
A: This depends on the business. Typically small to medium business are only required to lodge BAS’s once every quarter (4 times a year). However businesses may elect to lodge monthly should they wish (i.e. to keep on top of cash-flow). It should be noted that if you business turns over more than $20m or you have a large number of employees the ATO may require you to lodge on a monthly Basis.
Q: When are BAS’s due for lodgement?
A: If you lodge your own BAS’s they are due with the ATO on the 28th of the month following the end of the accounting period. For example the December 2015 Business Activity Statement would be due on the 28th of January 2016 if you lodged it yourself. However if you use a tax agent the lodgement date is two months after the end of the accounting period (i.e. following on from the above example, if you lodged through a Tax Agent your due date would be the 25th of February 2016).
Q: Do I need to have a copy of an invoice/receipt to claim GST credits on a Business Activity Statements?
A: Yes in order to claim GST credits on an expense you are required to have in your possession the relevant invoice showing the GST portion of the expense. These records are required to be kept for seven years. Rather than keep these pieces of paper around the office we at PAS suggest that you save them onto your computer where they will take up minimum space and be much easier to find should you ever need to locate them.
Q: What is the difference between Cash & Non-Cash reporting options?
A: Cash reporting essentially allows you report only on the amounts you have actually received excluding those amounts that you owe and/or are owed. For example a business that elects cash reporting will not have to include GST collected on invoices raised but not yet paid as of the end of the accounting period. This can be a useful option for small businesses who often have debtors who do not pay for extended periods of times. However it should be noted that should you select this option you will only be able to claim GST credits on expenses when you have actually paid for them (i.e. if you have large bills unpaid in Creditors at the end of the accounting period you will not be able to claim the GST credits on these expenses for that accounting period).
Q: Can I change my PAYG Tax Instalment?
A: Your PAYG tax instalment is your regular contribution towards your year end income tax liability as is included on the Business Activity Statement. You do have the option to vary this amount however PAS recommends that this is only done if you are sure that amount charged is too much. If you reduce you PAYG instalments at any point through-out the year and you end up having not accrued enough at the end of the year the ATO will not only charge you the shortfall but will also apply interest to the reduced amount(s). That being the case we recommend conducting with your accountant and/or tax agent before varying any PAYG instalments.
Q: What happens if I make a mistake?
A: If you do make a mistake that you become aware after lodging your Business Activity Statement do not panic. The ATO allows you to go back and adjust your previously lodged statements and make adjustments. You will also find that most GST adjustments can be adjusted for on your next BAS. This makes the whole process a lot easier.
At Progressive Accounting Solutions we have many years experience in helping the businesses of Geelong and the surrounding suburbs in completing their Business Activity Statements. Our affordable, reliable and efficient service options include: training, completion and lodgement and even ATO liaison services. Should you have any questions with regard to your BAS or any other accounting and tax related issues please don’t hesitate to contact us at 0438329958 or firstname.lastname@example.org.