5 Steps you must take at BAS Time
By Paolo Coniglio, 06.02.2021
Lodging your Activity Statement to the Australian Taxation Office represents much more than just informing the ATO on how much GST and PAYG you need to pay for the relevant month/quarter. The ATO drives a lot more data out of your BAS than simply assessing your business tax liabilities.
This has become particularly prevalent during COVID times, where the employer’s eligibility to access key Government Subsidies such as the JobKeeper and JobMaker Schemes, has been determined by the business ‘GST Turnover’ (the total GST Sales reported over a particular BAS period).
BAS time also represents the perfect opportunity for all businesses to ensure their books are clean, up-to-date and compliant before they provide key information to the ATO. Furthermore, this should also be a time set aside to review both Business Performance and Financial Situation to ensure the company is still on track.
So, what are the 5 Key Action Steps all businesses should take at BAS time?
Today we are going to share the key processes we complete for our Clients, as part of our core BAS Services.
1. Audit your Data
The first step you should take is ensuring your data is clean and up-to-date for the relevant reporting period. This includes:
Payable / Receivables
- Make sure all your Clients have been invoiced;
- Make sure all your Supplier purchases have been recorded;
- Check that you have not issued or recorded duplicate sales invoices or purchases transactions;
- Check for Unpaid Supplier Purchases in your system whose payments have been recorded as spend money transactions;
- Check for unallocated Sales Credit Notes or Supplier Credit Notes and allocate all Credit Notes to unpaid Sales Invoices / Supplier Purchases.
Bank Accounts & Clearing Accounts
- Check that your Bank Accounts / Credit Cards do not have ‘Unreconciled’ transactions;
- Check that all Clearing Accounts’ balances are $0.00
(or if they have an outstanding balance, there is an explanation for it).
Common Clearing Accounts are:
- Undeposited Funds (MYOB);
- Electronic Clearing Account (MYOB);
- Payroll Clearing Account (MYOB);
- PAYG Clearing Account (MYOB);
- Wages Payable (Xero);
- Suspense (MYOB/Xero).
- Ensure all employees have an assigned Superfund in their Employee contact details;
- Check that you are paying Superannuation on time;
- Check your Single Touch Payroll events are successfully submitted to the ATO.
2. Reconcile your ledgers
Most people associate the word ‘Reconciliation’ to just Bank Accounts and Credit Cards. However, that is incorrect, there is so much more to reconcile each quarter to ensure your accounts are compliant, including:
- Reconcile your Bank Accounts | Credit Cards and Loan Accounts > Match your physical statement balance with the calculated bank balance in your accounting system;
- Reconcile Receivable > Match the total of your unpaid sales against the balance of Accounts Receivable in the Balance sheet;
- Reconcile Payable > Match the total of your unpaid purchases against the balance of Accounts Payable in the Balance sheet;
- Reconcile Payroll > Match the total of your Payroll Reports against the total of Wages expense accounts, Superannuation expense account and PAYG liability account;
- Reconcile GST > Check if GST in previously lodged periods has not changed. Check if you have recorded transactions including GST for Suppliers not registered for GST. Make sure no transactions have been posted directly to the GST Account(s).
3. Lodge and Pay your Activity Statement
Once you have audited and reconciled your books, it’s time to lodge your Activity Statement. There are three ways you can lodge your BAS to the ATO:
- Manually by using the ATO paper form;
- Electronically via your Business Portal (MyGovID must be set up);
- Electronically through a registered Tax/BAS Agent;
It is important that your Activity Statement is lodged and paid on time. Quarterly lodgement deadlines vary depending on the way you lodge your BAS to the ATO. Here’s a table of all quarterly deadlines to lodge and pay your BAS. If you cannot make a full payment, make sure you contact the ATO and organise a Payment Plan (interest charges apply).
4. Balance your ATO Account
Once your BAS is lodged you should ensure your GST and PAYG liabilities for the quarter are correctly cleared in your Accounting System. Finally, after you pay your Activity Statement, you should download your ATO Integrated Client Account from your Business Portal and reconcile it against your ATO Account set up in your Accounting System.
5. Review your Business Performance
Now that your accounts are audited and your business is up to date with the ATO, it’s time to review your quarterly performance. Ideally, you want to run key reports monthly, however, if you are a busy business owner who works in the business, you should at least set aside 45 minutes each quarter to review how your business is going. These are the Management Reports we compile and send to our Clients as part of our BAS Services:
- Quarterly Profit and Loss;
- Quarterly Cash Flow Management;
- Aged Receivable;
- Aged Payable;
- Quarterly Payroll Summary;
- Leave Balances;
- Superannuation Payments.
The combination of the above reports will give you important insights on how your business is performing, your relationship with your clients and suppliers, and finally your Payroll costs. Take some time to review these reports. Then, start making any necessary changes to reach your goals or if you haven’t before, start setting some goals based on real, valuable data.
So how much time you should budge to complete all the above tasks?
This can be difficult to determine and it entirely depends on how good you are at managing your books day by day, the volume of your Receivable and Payable transactions and finally, the number of your Bank Accounts. However, as a bare minimum, you should budget:
- 2-4 hours to audit and reconcile your books (including the ATO Account);
- 15-20 minutes to lodge and pay your BAS and to correctly clear your liabilities in your Accounting System;
- 15-20 minutes to run your quarterly Management Reports;
- 45-60 minutes to check your reports and review your Business’ goals.
So if at this point in time, you are probably wondering:
“I have never checked all the ledgers”
“I have never reconciled the ATO account (I didn’t even know it existed)”
“I never run quarterly reports, that sounds like a good idea, but what if I don’t understand some of the information they provide?”
“Where am I going to find the time to ensure my accounts are audited and reconciled? I thought once I reconciled the Bank Accounts I was done.”
Don’t despair, this why our Clients trust Evolution Cloud Accounting to complete this process on their behalf. Our BAS Services can either be included in our ongoing bookkeeping packages or provided as a separate package. You look after your day to day books, we check and audit your accounts, lodge your BAS (giving you 4 extra weeks to pay), clear your liabilities and run your Management Reports.
All you have to do is pay the Activity Statement and review the reports we provide to you. And if you need help with understanding your Management Reports, you can always take advantage of our Advisory Services. We are here to support your business in whatever capacity you want.
If you are looking for Peace of Mind at BAS time, Contact Us to discuss your next steps.
This blog and attached resources are of general nature designed for informational and educational purposes only. They should not be construed as professional financial advice for your individual business. Should you need such advice, consult a licensed financial or tax advisor.