Every small-business owner knows the pain of tax time, and the temptation to put off the paperwork is sometimes irresistible. While it can be easy to let things slip, getting on the wrong side of the ATO can break a business. If your business is registered for GST and PAYG then you must submit quarterly or monthly BAS returns, so it’s worth being aware of the common pitfalls so you can avoid them.
Mistake #1: Missing deadlines
A BAS needs to be lodged either monthly or quarterly during the intervals listed below – these deadlines are not optional.
Monthly: 21st day of every month for the most recent month
Quarterly: 28th of October, February, April, and July
You’ll need to lodge your annual GST return and pay the amounts owing by the date on the front of the return (the date of payment will be the same as your income tax return deadline). If you aren’t required to lodge an income tax return, the due date for these payments will be 28 February
Failure to lodge penalties range from $110 to $550 for each 28-day period, so things can escalate quickly if ignored.
Solution: Use a calendar that is cloud-based for BAS deadline reminders. Add paperwork time into your work cycle and routinely block out time in your calendar each month to address it – and ask your team not to disturb you!
Mistake #2: Lodging your BAS with incorrect information
Putting off account admin will make BAS submissions stressful, and lead to mistakes being made.
If you become aware of a mistake, it’s imperative you own up to it, and quickly. You might be asked to pay interest on the underpaid tax (or receive a credit if you’ve overpaid). If the ATO is suspicious, and think you might have deliberately ignored the law, you will be hit with penalty interest (in excess of 9%) calculated on the shortfall.
Solution: Online accounting software like Xero or MYOB makes your accounting process simpler and should help prevent errors in calculations. If you prefer to handle your BAS yourself, manage a tight and detailed database of your finances, and make the most of any available services to help reconcile your accounts.
Mistake #3: Submitting the wrong information in the wrong places
Lodging errors are common and can make things complicated down the road. Two of the most common mistakes include:
Listing wages and superannuation contributions as purchases at G11
Excluding cash taken from the till to pay for purchases.
Wages must be reported as wages at W1. Superannuation contributions are not reported
Include all cash payments made out of the till for purchases in section G1.
Solution: Create a step-by-step outline that explains where to enter information so you can easily refer to it. It will become easier with practice, but having a point of reference is very useful – especially if you take a holiday and someone else in the business has to carry out the process on your behalf.
Mistake #4: Including dollars and cents
You shouldn’t include cents for any amounts in your BAS return. Round up (≥$.50) or down (≤$0.49) to whole dollars when completing your statement.
Solution: Avoid using cents, decimal points, commas, $ symbols or words like nil and n/a, as they increase the chance of adding errors. Formulate cells in your spreadsheet to only use rounded dollar figures so that these mistakes are picked up automatically.
Anna Fitzgerald, Senior marketing and communications manager, Prospa