5 Reasons Why Having Accurate Business Activity Statements (BAS) Is So Important
Never underestimate the importance of accurate record-keeping for your business.
A business activity statement (BAS) relates to GST, PAYG and some other taxes. If your business has an ABN and is registered for GST credits then you will automatically receive a business activity statement. It is always in your best interest to keep an up to date and accurate account of what’s going on in your business each month or quarter. Here we will tell you why.
If you fail to lodge your BAS on time then you will have to pay a series of fines. For a small business, it’s one penalty unit ($110) for each set of 28 days with a maximum of $550 in fines. A medium entity faces double the penalty. This is a business with a turnover between $1 to $20 million. Furthermore, for large businesses (that is, businesses that have more than $20 million turnover) the penalty is 5 times the penalty unit. In the case of a major global business, it is 500 times the penalty. This may sound severe, but as long as you pay and submit your BAS on time you can avoid this financial loss.
When submitting a BAS, your business will either owe money or be owed money. However, if there is a tax debt or the business failed to fill out all the necessary information, then a refund may be withheld. By submitting all the necessary information and staying up to date you won’t have to endure withheld tax credits. If you’re experiencing issues with refunds despite accurate reporting and following the guidelines, you might want to check with business lawyer.
3. Mistakes on a business activity statement
Mistakes are common and are part of human nature. However, if there is a mistake on a BAS you may have to lodge a new revised BAS. This is extra time and resources wasted. If the mistake is a GST mistake then you should aim to fix it as soon as possible. A GST mistake is an error in calculating the net GST amount whether it be more or less than reality. The penalty for having incorrect GST reporting can include not only penalties but also general interest charges.
4. Track your business
Part of doing BAS means diligent record keeping. It involves logging sales, fees, expenses, wages and costs. By keeping up to date and providing accurate reporting, you will then have access to your own personal history of the state of your business. This allows you to set budgets and make accurate predictions based on how you did in your previous BAS.
5. PAYG and employees
In your BAS you have to declare withheld amounts of PAYG. You then have to pay the withheld tax to the ATO. By keeping an accurate BAS it will assist in the creation of the PAYG withholding annual report. You should aim to lodge this report after giving employees their payment summaries. Hence, the quicker you submit it then the faster they can fill out their tax return Thereby, leading to an all-around happier set of employees.
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Justin is a legal intern at Lawpath as part of the content team. He is currently studying a Bachelor of Laws and a Bachelor of Economics at UTS.